CTA Case No. 3650 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITV HAWAIIAN-PHILIPPINE COMPANY, Petitioner, - versus - C.T.A. CASE NO. 36SO THE ACTING COMMISSIONER OF INTERNAL REVENUE, Respondent. M- - - - - - - ~ - - - - - M D E C l: B l: 0 N This is a claim fot" t"efund/taM credit of the amount of P156,133.00 representing petitioner's erronaousl y paid / 5" compensating taM pursuant to Section 292 <now Section 243) of the TaM Code. Petitioner is a domestic corporation organized and &Misting under the laws of the Philippines. It is a sugar centt"al and is engaged in the manufacture of sugar. For its milling operations, petitioner imported the final shipment of one ( 1 > 1ot sugar cane crushing mills and associated equipment, which was covered by Bill of Lading Nos. 4 and 5 of Asia EMpress, Ltd., both dated June 11, 1981, Commercial 223

DECISION CTA CASE NO. 3650 - 2- Invoice No. 1931 dated May 27, 1981 issued by Walkers, Ltd., CB Re 1 ease Certificate No. 8112969 dated July 6, 1981 and computation of customs d�Jties, compensating taxes and other charges. <Exh. A, A-1, A-2, A-3, B, B-1, C, C-1, D and 0-1.) The said imported articles arrived at the Port of Manila via the vessel "Asian Pearl" on June 21, 1981. <Exhs. D, D-2, E and E-1.) Subsequently, in a letter dated March 22, 1983, the Ministr~y of Finance certified that the sugar centrals managed by Jardine Davies, Inc., including petitioner, are "exempt from the pay111ent of 5" co11pensat ing tax and 5" custo11s duty under Presidential Decree No. 1395". <Exhs. I and I-1 and Annex H, Petition for Review.> In a lettet" dated June 15, 1983 and filed with the Con1111issionet" of Internal Revenue's Office on June 22, 1983, petitionet" requested fot" the t"efund or tax credit of the erroneously paid co11pensating tax a11ounting to P156,133.00. <Annex I, Petition for Review.) Since respondent has not yet granted petitioner's request for refund or tax credit, this appeal was filed to intet"r upt the running of the 224

DECISION - CTA CASE NO. 3650 - 3- prescriptive period for the refund or tax credit of the said amount. This appeal, as well as the claim for refund or tax C'l'''edit, have been filed within two years from the date of payment of the tax sought to be refunded or credited in accordance with Section 292 and 295 <now Sections 243 and 246> of the Tax Code. Respondent Commissioner of Internal Revenue has not submitted any evidence to the contrary. Instead, respondent submitted the case on the basis of the records and the pleadings. The only issue to be determined in this case iB whether or not petitioner's impot"tation of one (1) lot sugar cane crushing mills and associated equipment for use in its sugar milling operations is exempt under Presidential Decree No. 1710 from payment of compensating tax and customs and tariff duties. Presidential Decree No. 791, as amended by Presidential Decree No. 1710, promulgated on August 13, 1980 provides as follows� "Section 1. Any person, partner�hip, company O'l'" corporation who or which is now engaged or shall engage in the business of manufacturing, milling, processing or refining of sugar shall be exempted from the payment of 225

-- - .I '' DECISION - CTA CASE NO. 3650 - 4- 5pecial import tax, compensating tax and ~...!J..~t Of!!_~Jld tariff c;iut i es in respect t Q. the iMportation of plant machinery, spare P~.rts and other equipment effective upon the approval of this Decree until June JO, 19e_~.!L 11 "Sect ion 2. The exempt ion under this Decree shall cover only the importation of plant machinery, spare p_art_t__~_r.~d_p_ther tL~ent, including road bt..lilding equipment, sugarcane transport, agricultural tractors and implements thereof, directly and actually needed and to be used exclusively in the development of the factory site and in the production, manufacture, milling, proces5ing or refining of sugar by the grantee of the exemption under this Decree, if shipping documents covering the importation are in the name of tax- exempt firms to whom the goods shall be de 1 i vered by the customs authorities ... <Empha5is ours.> Since petitioner is a sugar central engaged in the business � of manufacturing, mi 11 ing, processing or refining of sugar; and petitioner imported the machinery and spare parts within the prescribed period which is August 13, 1980 to July 30, 1985; and that the impot"tat ion consisted of plant machinery, spare parts and other equipment directly and actually needed and to be used exclusively in the development of the factory site in the production, manufactut" ing, milling, procoessing or refining of sugar; and that the shipping documents covering the importation are in the name of the 226

--- DECISION - CTA CASE NO. 3650 - 5- tax-exempt fit"m, then we hold that petitioner is exempt under Presidential Decree No. 791, as amended by Presidential Decree No. 1710. Even the Ministry of Finance, in a ruling stated that "yout" t"equest ft"om exempt ion ft"om the payment of 5Y. duty and 5~ tax may be authorized pursuant to Memorandum No. 10-83 dated January 28, 1983." <Exhs. H, I and I - 1.) WHEREFORE, the claim fot" t"efund/tax Ct"edit of petitioner Hawaiian-Philippine Company of compensating tax in the amount of P156,133.00 is hereby granted. Without pronounc@ment as to costs. SO ORDERED. Quezon City, Metro Manila, June 3, WE CONCUR= Associate Judge 227

- ......- - - DECISION - CTA CASE NO. 3650 - 6- CE RT I F I CAT I 0 N I hereby cer tify that this decision was reached after due c onsultation among the members of the Court of Tax Appeals in accordance with Section 13, Article VIII of AMANT Presid 228