CTA Case No. 4425 (Resolution)

REPUBL IC OF THE PHILI PPINES COURT OF TAX APPEALS QUEZ ON CITY DOW CHEMICAL PACIFIC, L IMITED, Petit i OYter, versus - C.T.A. CASE NO. 4425 THE COMMISSIONER OF INTERNAL REVENU E , Respondemt. x ----�- - - - - -�-x RE S 0 L UT I 0 N Petitioner moves the Court vacate its resolution dated Jar-tuat'Y 17, 1'392 dismissing this case'' (Motion For Reconsideration, p. 3; CTA Records, p. 74>. This case involves a claim for refund or tax credit of P636,623.00 in allegedly overpaid value- added tax <VAT> "Dursbar-. F", a raw mat et' i a 1 used in the manufacture of pesticides. It appeat's that, due to its pursuit of an early and administrative settlement of this case, petitioner, had, several times during the course of the instant proceedings, requested for and been all owed by the of heari Ytgs of th e case. Howeve1��- , on October 31, 1':391' the Court denied petitioner's latest motion for post ponement, and

RESOLUTION CTA CASE NO. 4425 - 2- o:�t~dered this case dismissed failure O:�f petitioner's counsel to appear and prosecute <the same)" <Reso:�lutior� dated Novern ber 4, 1991; CTA 61) . On Decernbe r 10, 1991, petitioner filed with Us its rnotion, dated Decembe r 9, 1991, seeking reconsideration of Our November 4, 1991 resc�lut ior�� or. Jar.uary 17' 1992, during the scheduled hearing of petitioner's December 9, 1991 motion, the Court, after lifting its October 31, 1991 ordet~ cof dismissal, once again d ismissed the instant case, this time upon motion to that effect by pe titioner's counsel. It is this second dismissal of the c ase by the Court which i s the subject of petitioner's instant motion for reconsideration filed on February 12, 1992. the that its questioned order was mad e upon oral motion to dism i s s the case made by petitioner's counsel in open Court, as evider.ced by the fo l lowing portions of the transcript of s tenographic notes of the January 17, 1992 hearing of this case, as quoted below: "JUDGE ROAQUIN: What is your move? ATTY. DIDULO: ~�ll _ in~�ffi~�n _ _ i�i�l _ ~ �_ !b�_~��2Qn9�n! b~� - ~l~�~Q~--~22 ~ QY�Q _ _Q~~--�l~ i m fQ~ - ~�f~n9~--~� _ j~�!_ffiQY� _ fQ~ _ !b� Qi�ffii��~l _ Qf_!Q�_�~��~ 358

RESOLUT ION / CTA CASE NO. 4 4 2 5 - 3- JUDGE ROAQUIN : If that i s t he reason, the case is hereby di sm issed . JUDGE ACOSTA: But indicate ther e tha t t he cause for the dismissa l is the approval made by the Commissioner of Internal Revenue not for failure tc� pt~osecute. JUDGE ROAQUIN: And so you are moving for the withdrawal of the case? After we have lifted already the dismissal of this case, you withdrawing the case? ATTY. DIDULO: ! __ ~ill __ fil� __ ~--~~iiign __ ~iib9~~~~l~ ro9ii9n __ fg~---~iib9~~~~l __ gf__ ib� �~��~ JUDGE ROAQUIN: Yes, you are moving for withdrawal of the case. On motion of counsel fot~ p e t i t iortet~, the case is hereby withdrawn and the case is t et~rn i r.at ed artd c 1 C�sed. " <T.S.N., Jar.uat~y 17, 1'3'32, pp. '3-10>. The Court, thet~efc�re, finds it highly ur.usual, if a that same counsel now comes before it seek ing reconsideration of said dismissal order. Be that as it may, however, the Court finds it necessary to make a full discussion on the merits of the issues brought before it in the instant motion. It appears from the transcr1pt of stenographic notes taken during the January 17, this case that petitioner received a letter dated August 2, 1'3'30 from respondent granting the claim for refund subject of the instant action <T. S. N. of Jar.t.li:n~y 17, 1'3'32, p. 2). However, no actual refu nd 36G

RESOLUTION CTA CASE NO. 4425 -4 has yet been granted to petitioner <I~i~., p. 4>, as respondent, when it granted the claim for refund, merely fo rwarded the same to the Bureau of Customs with a favorable recommendation and instructions to verify whether the tax to be refunded was remitted to (l~� ' pp. 3 ar1d 5). The Cc��.trt dismissed the instant action on the ground that respondent has already granted petitioner's claim for reftmd. Ir1 the instant motion for reconsideration , petitioner argues thus: "4. Ir1 the scheduled hearing on Jal'"ll.tat"'Y 17' 1992, the Honorable Court dismissed the case on the following gt"'OUY"1dS: a> Si r.ce the subject claim fcot"' t"'efur.d was already appt"'c�ved by the Respor.der.t, the Pet it i onet"' has lc�st its cause �:Of act ic�n against the fo::ot"'mel~, ar1cl b) The proper procedure to be followed is for the Petitioner to work for the issuance of the refund from the Bureau of Custc�ms. If the Bttt"'eau of Customs denies the claim for refund, Petitioner can appeal the decision by filing a Petition for Review with the Honorable Court. The value addPd tax (sic} paid under Section 103<c> of the Tax Code, as amended, is an internal revenue tax, and under Section 230 of the same Code, Petitioner has only two years from date of payment of the tax within which to file its claim for reflmd. The a~weemer.t betweer�, the Respondent and the Bureau of Customs wherein the Respondent empowered the Bureau of Customs to issue refunds on erroneously paid taxes on imported products will

RESOLUTION CTA CASE NO. 4425 - 5- facilitate the processing of the claims for refund but it does not deviate the fact that the Respondent is still the principal party in this case. With the dismissal o f t h e Petitioner's claim for refund, we are faced with the dilemma in the event wh en the Bureau of Customs will deny the claim and the two- year prescriptive per i od had already 1apsed. The Petit i c�r�er is r.ow faced with the real possibility that it could not elevate the denial by the Bureau of Customs of its claim to this Honorable Court, thus foreclosing any judicial and administrative remedies available, to the prejudice of the Petit ic�r�et~. " <Mc�t ior. Fc�r Recor.sidet~at ic�r�, pp. 2-3; CTA Records, pp. 73-74> Relevant to the subject matter of the instant motion are the pronouncements of the Court of Appeals i r� the case c�f ~!L <C.A.- G.R. No. 24495-SP, May 7, 1991>, to wit: "The responder.t cout~t, ir� cc�r�stt~uing paragraph 2 of Section 1708 <of the Revised Tariff and Customs Code, as amended>, should have read, relate and consult (sic> said paragraph with section 6 of the National Internal Revenue Code of 1977, which provides that 'for the collection of the national internal revenue on imported articles, the Commissioner of Customs and his subordinates xxx are constituted (as) agents of the Commissioner of Internal Revenue'. Those words/phrases 'constituted as agents of the Commissioner of Internal Revenue' are meaning ful . The word 'agents' or si mply 'agent' , ordinarily means a person empowered to act for another, or one who acts or is empowered to act for another, the like of a representative of a government agency, or a deputy of a public official to whom cetain authorit y has been delegated by his super1or. �~�QQ~iQ a~~n�t~L-lnsL--~�L_e~t�~nQ, 91 Ph i l . , ao4, says that an agent is one wh o accepts another ' s representation to perform in his name certain acts of more or less

RESOLUT I ON CTA CASE NO. 4425 - 6- transcendency. In brief, an agent is a person who performs an action or brings abc�ut a cet~tair-� t~esult, for ar-1d ir-1 behalf of another. IhY�L_�iD�~-~~-~~Q~~��_ffi~D~~t~ gf __ �~�ti2n __� __ Qf __ th~--~~t i 2n~ l __ lnt~~n~l B~~~DY ~-~Q~~L __ th~-~~Qffiffii��i2 D ~~- Q f_~y�t2ffi� ~D~_hi � __ �Y~Q~~iD~t~�~L-~~~--�QD� t itYt~~-~� ~~g~nt� ~_ Qf __ th~-~~2mmi��i2D~~--Qf_lnt~~n~! R�~~ny~_in __ th~_�2ll~�ti2 n __ Qf_th~-n~ti2n~! iDt�~D~!-~~~~DY~ __ QD_iffiQQ~t~~-~~ti�!~� ~_th� ~2mmi��i2D~ ~- ---Qf ____ ~y�t2ffi� ____ ~n~ ____ hi� �YQQ~~in~t~�_�h2Yl~--Q~-~~~m~~-~�_fQ~ming_~ n~�~��~~~-Q ~~t __ ~n~_�QffiQ2 D ~nt_Qf_th~ -~Y~~ ~Y 2f _lnt~~D~l--B~~~DY~-~D~--~�t __ fQ~--~D~--iD Q~h~!f __ gf __ th� __ ~Qmmi��iQD~~--Qf __ lnt~~n~! R~~~nY~L-~�--~~gy!~~~-in_�~�tiQD_~Q�_ Qf_ih~ i~~--~Q~~' governi ng ' Recovery of tax erroneously or illegally collected', in relation to section 309, paragraph 3, last sentence of the same Code, providing that xxx No credit or refund of taxes or penalties shall be a llowed unless the tax payer (sic) files ir-1 wt~itir-,g with the Commissioner, a claim for credit or refund xxx . ' !y-, this issue, ar-.othet~ wt~itter-, claim for refund addressed to the Commissioner of Internal Revenue would be a surplusage, time-wasting, productive of red tape, and resulting in needless delay in getting routine business done. The petition for Review filed with the respondent court impleading the Commissioner of Customs, without addit i ona lly impleading the Commissi oner of I r-.-t et~r-,a 1 Rever-.ue, is deemed su ff 1 c i er-.t. Since the Commissioner of Customs is expressly constituted by statute as the agent of the Commissioner of Internal Revenue, the former can be sued without need of joining the latter in accordance with section 3, Rule 3, Revised Rules of Cc��.n~t. xxx." <Ur-,det~ scc�t~ir-�g supplied) The Court believes that, although t he E~2�i ~~-~ �~m~!~ decision of the Court of Appeals invo lves the reverse of the situation in the instant case (that is, it i y-,v�::o 1 ves a sit uat ior-1 wher-1 th e Commissioner of Customs, and not the Commissioner of 36~

RESOLUTION CTA CASE NO. 4425 -7 l�r~t ~1'nal Revenu e, w ~'� i rnp 1 eCicled to a case l nvo:ol /1 ng a cl.a:un o;:of t'efur-.d of a llegedly er'i�'o:oneous ly p tc:~xes imposed on imported items), the pr1nripl es lc:ll 1n the portions thereof quoted above, are ThE Co�. tt't ern ph a~~ 1 zes that t ht;> d rn 1 was not made on theta 1 r:of ldck of t C�n, f�.�t , beer. hPJ. d lYI "the .JU~'i.o:;dictic�r-� o:::of l l e .-,nee �.tnt i 1 the case is f 1 na 11 y t ~ '11 nat ed. 4 '"! f. ') 15] I[ r.l ec ; r 1. '-JLUJ ) � 1 Y1C e en�..mr.iatr.'.O'cl by the Cout't of Appec'' J. c, 1 Y1 t hP the Comm1ssionet o of I ,lo HilS 1 c r .s subor'd i r-1at es are rc:�Y�S :i der'ed a t'E ondPYit 1-'Hth j�'eSpt=>Ct to l�he CC�llect]oy-1 ,,-1' ir-d:;er'Y"1al :tmpor�'ted go:�ood~;., ther-� the ca�.tses the PetJ.t.tconer' car-.not r-ely o.or-1 chf2 thr��ea " ' Joossible r e.) ec t l� :on 0:::0 f i t s c l a i m by ttv [ 1 -toms ,<�.tl~ho..o;� 1 t; :tes, tc:o LOY"�VJ.l'"IC e the Co:ou;�'t o:of tl E eu t o the rase. as er-��-mc i at ed by the Cout't

RESOLUTION CTA CASE NO. 4425 - a- �~m.Ql~ case, the Commissioner of Customs and his subordinates are considered as agents of respondent with respect to the collection of internal revenue of imported goods, such relationship protects petitioner herein from the anticipated possible dilemma it discusses in its instant motion. For, in an agency, it is a basic rule that "the ager.t must act withir� the sco:�pe o f his authot'ity" <At't. 1881, Civil Code of the Philippines). The Court notes that i n the case at bar, respondent on ly authorized the Bureau of Customs to ''issue the t ax r e fund for value added tax payments after it has verified the actual receipt of payment of taxes by the government in compliance with the req u i rerner.t s c�f the Comm iss i or� c�r� Audit" For Reconsideration, p. 1; CTA Reco t'ds, p. 72). Therefore, the Customs authorities, being mere agents in the instant case, as petitioner fears, deny its claim for refund. At most , the Bureau of Cust oms may refuse to pay the tax refund if it finds the Commission on Audit requirement on actual receipt of payment of the questioned VAT by the government not complied with. But even then, respondent's approval of the claim for refund would still stand, and there is nothing more f�::.t' petiti�:�r�et' "to elevate" tc� this Co�..tt't. although the actual 1et t et' from respondent to it of the grant of the claim 365

RESOLUTION CTA CASE NO. 4425 - 9- was not submitted to the Court nor annexed to the finds on the basis of petitioner's own motion for reconsideration that said grant is unconditional, rather than with a suspensive or" reso 1 ut ot"Y condition attached to i t . The prerequisite showing of actual receipt of the VAT to be reftmded is t"eq�.t ired c�f pet itioner to meet, and which if not complied with would cancel, rescind or suspend the grant of refund. Ir� fact, such condition is an internal po l icy which is addressed to the Customs authorities. Therefore, if non-payment of the refund occurs due to with the Commiss i or� Audit requirement, all that petitioner has to do is to file a case for mandamus against the Customs authorities before the proper court, to compel them to make the required remittance of the VAT in question <which they collected in the first place) to the government. After" all, it is the ministerial duty of the Bureau of Customs to remit to the national government a ll internal revenue taxes, among other things , which it collects from i mported items. Clearly, therefore, petitioner' s rights will not be j e opardized if the case at bar is dismissed. ACCORDINGLY , the Court, acting on pe titioner's motion for reconsideration which it f i r.ds wit hc��.tt merit, resolves to deny the same. The Cc�ttt"t het"eby

RESOL UTION CTA CASE NO. 4425 - 10 - lets its order, made in open court on January 17, 1992 and confirmed in its resolution dated January 21, 1992, dismissing the instant action on the ground that petit ic�r�et~' s "claim fc�r tax t~eftmd <subject matter of its petition for review> has already been stand undisturbed. SO ORDERED . Quezon City, Metro Manila, July 17, 1992. STELLA DIVAS- FARRALES e., a ;y;; Q,. Q~ Acting sociate Judge ERNESTO D. ACOSTA Presidir�g Judge ~. -