~---- T.PUBLI Op Th& Phil Ppines, et al. vs. Ted & Co., I Nc, et al.

DECISION -

- 4 - i mpor ted refrigerati on machines show tha t t he so-called ' small walk-in col d s torage f or food 0 is actually a cooled refrigera tor undoubt edly to be used for stor ing and keeping.food and other i tems cool and , therefore, similar or analogous to ' food and beverage storage c abinets'" within the con text of Secti on 196 ( i) .and (m) . in relation to Section 193(b) of the Tax Code , as amended by P.o. No . 1358, subj ect to t he higher rate of tax at 25% advance sales t ax and SOi mark-up . As a consequence of t he above posit i on of the respondent , peti t i oner had paid an additional amount of ~36 , 086 .00 or 25% advance sales tax plus 50~ mark-up on May 14, 1979.

(Annex "E", p. 15, CTA rec.) . However , shortly after, or on July 24 , 1979, petitioner filed a claim for r e f und of said amount of P36 ,086. 00, stating therein th~ the payment and collection thereof was erroneous and i s not in accordance with law. It stead- fastly c lung to its belief that t he questi oned mer chan dise should be subjec t only to the l ower r ate of 10% advance sales tax and 25% mar - up , and i t c a l led r espon- dent 's attention t o an .earlier ruling dated August 9, 1973 of the then Commissioner of Internal Revenue Misael P. Vera (Exh . "K", p. 54, CTA r ec., underlining ~ · ) .quoted hereunder· 199 l

DECISION -

CTA CASE NO . 3065 - ,5 - Mr . D. A. Monteliba o

Executive Vice- President

Smith , Bell & Company, Inc.

P.O Box 311, Manila S i r :

August 9 , 1973 This r e f ers to your letter dated August 8 , 973, r equest ing confirmation that the impor t - ations of your corporations, namely:

Commins

Diesel Sales and Service Corporation of the

Philippines; Smith, Bell & Company, Inc .,; and G. M. Lo.vsted & Co. (Phil), Inc. of Frigi- king Car r ·cr-Tr ansicold , Krack, J & E Hall, Copeland, Spa rland and Penn industrial refri- geration equipment and parts and accessories thereof are subj ect only to the 7% advance sales tax.

It is sta t ed in your letter t hat the i m- ported i ndustrial r efrigeration equipment are for i nstallation in built-in truck refriger- ation units, concrete war ehouses, i nsulated containers and boxes or i nsulated ships 0 holds of your clients who are engaged in shrimp , and f ish processing f 0r ~xpo!!L_frozen food manu- f acturers, frozen chicken producers, supermar ket cold storage , fi shing boats, etc . In reply , I have the honor to infor m you that consider i ng the f oregoing nature and uses of t he ind ustr i ~ l refr igerators imported by your above-named corporations and our appreciation of the brochures s ubmitted, said i mportations of i ndustr ial refr igerator s toge ther with par ts and accessories t heJ:eof _ _E..y your aforenamed cor- porations_are subj ect to the 7% advance sales t ax based on the l anded cost thereof plus 25% mar k- up , pursuant to s·ection lSJ(b) in r elati on to Section 186 , both of t he Tax Code . Very truly yours, HISAEL P. VERA

Commissioner of Internal Revenue

TAN 1 601-593-5

200

DEC ISI ON -

- 6 - To i ll c i date further on the s i gnif i c ance o t he above ru ing t o the c ase at hand , i s t he f ol owing explanat i on of pe t itioner t o the present r a t e of 1 0~ from t he original 7 ~ , which pe t i t i one r now believes as the onl y correct r ate upon whi ch a mor e judicious assess- ment of t he goods s hou l d be made : A l ook- back of the hi story of Section 199 of t he Tax Code , as amended , will l ead us to concl ude t hat t he l aw making body or t he t axing authority t hemse l ves have int ended t o tax these equ i pmen t s at t he r ate of 1 0~ advance sales tax and 25% mar k- up as provided f or i n Sec tions 199 in r elat i on to 193(b) and not 25% advance sales tax and 50% mark- up · unde r Secti on 196 (i) in r elat ion t o 193 (b) ther eof .

· · I t must be noted that befor e t he enac t - ment of P. D. 1358 , t he provisi on covering t he "Percentage Tax on Sales of Other Ar ticles" was Section 186 of t he Tax Code pr ovid i ng for a r ate of 7% .

Upon. t he enactmen t of P. O. 1358 , Sec t i on 186 of t he Tax Code was amended and became Section 199 t hereof provid i ng t he tax rate of 10% .

Subs tantia l l y , t he amendment wa s on the i ncrease of the tax r ate from 7% to 10% . PeD. 1358 , li kewise , amended all other sales t ax provisions enumerating therein additional ar t i cles or pr oduct s covered by t he var i ous r ates prov i ded fo r in the amended provisions wh i ch are now Sections 194 , 195, 196, 197 , 198 and 201 of t he Tax Code , as amended .

Ye t in all these amendments , even i n the previous sales_!ax provisions , c omme r - c ial and/or industrial r efrigeration equ i pment units wer e n ot amon9 those enumerated t herein . The i nt enti on , ther efore , i s c l ear and indubi - t able - that t hese art i c l es ar e to be t axed under Sect ion 199, "Percentage tax on other s emi-essent i al a r ticles ."

The in t en t to t ax t he arti cles in questi on under Sect i on 199 not under Section 196 or other 201

DECIS ION -

CTA CASE NO . 3065 - 7 - Secti ons of the Tax Code , as amended , becomes more apparen t when we take cognizance of ~­ pendent ' s r uling, dated August 9, 1973, speci - .

fic ally stating t herein t hat herein peti t ioner 's i mpor t ed ref igerati on equipment and parts are s ubj ect only to 7% advance sales t ax pursuan t to Section 183 b) (now Section 193 (b) in rela- tion to Section lB6 (now Secti on 199) 'of t he Tax Code , as amended.

(Unde r lin ing ours.)

Petitioner then pr oceeded t o state t ha t : Accord ing t o the weigh t of authori t y , and surely the better view, t he cour t may consider the general history of a s t a tu te , including its derivation xxx" (Penn. Mutual Life Ins.

Co . v. Lederer, 252 u.s. 323, 64 L. Ed. 698 , 40 s . Ct. 397; Kelly v. Dewey, 111 Conn, 201 , 149, p. 382 Statutor y Constr uction, Crawford ) Con t rari l y , respondent avers that , merchandise in question consisting of refriger ation equipment and parts are s imila r or analogous to those enume r ated under Secti on 196 ( i) .and (m) of the Tax Code, as amended . To disprove this point, i n one of the hearings in this court, an affidavit was presented and on which t he witness tes tified on t he bas ic dif ference between the commerc ial r efriger- ation equipment and the household refr igerator/ f r eezer/ cooler, (pp. 17-19, t s n , Oct. 9, 1981) .thus : Q.

In th i s af f idav~ t there i s a caption of "Basic Differences Be t ween Commercial Refri ger ati on Equ ipment and Household . Fr eezer/Refri ger ator/Cool er.

Are t here X X X?

A.

Yes.

Q.

Will you please read the difference of what is stat ed there x x x?

A.

Well, a household refri gerator unit is self-contained one where i n you can just

DECISI ON -

- 8 - plug i t on.

It is completely bui t .

The r anges of horsepower is between 1/ 6 to 1/4.

The condenser s are f inned ser- pentine coil without any fan .

There is no receiver and the evaporator s are printed plates wi th bare pi pe coil . x x x .

XXX

XXX

XXX

A.

x x x They are portable .

They do not need maintenance ~~p le and t hey are mostly single phase unit ; and they are generally cabinet t ype package . Q.

How about t his one?

A.

The commercial type un i ts are the ones you can see i n t he supermarkets , hotels , restaurants .

Example of these are dis- Elay cases where you can see i n t he suEermarkets ; x x x Actually, you can go inside the room .

x x x

The type of unit is split t ype e Actually they are not pre-assembled.

x x x .

XXX

XXX

XXX

A.

Yes , t hey are ins talled on s ight. The r anges of hor sepower is 1/3 horsepower to 100 .

The condensers are finned coil with fan motors .

The expansion valves are thermally act uated .

The units are fixed and cannot be transferred or moved. Mostly , they are three-phase- vol tage requirement .

x x x . "

(!:!.!}derscor ing supElied .)

Meanwhile , on cross- examination by r espondent Com- missioner of Inter nal Revenue , the witness further t estified (pp . 3-4, t sn , Dec. 3, 1981) .t o wit: Q.

Mr . Pangi l inan , in the previous hearing you tr i ed t o di ffe r entiate t he different t ypes of refrigeration units .

Could you possibly descr ibe to us how t his refri- · geration mach i e looks 1' e?

· A.

Usually , t he household tyEe is someth ing l ike cabinet wherein you could store food ~hile those in commercial t ypes they are 203

- 9 - li ke chiller rooms.

You can enter the ~ · They a r e the display cases , x x x Q.

The pureose of this, I understand , is to keep the food and other f ood i tems cold and frozen?

A.

~ · (EmQhasis Supplied. )

From t he above , it would seem, therefore, that through the years from 1973, when t he first ruling on the applicabl e tax rate to the questioned merchandise (commerc ial r efri geration equipment and spare par ts) '· carne out, to the present, the taxing authority has not, in the l east , bothered to make a positi ve change in the rate of tax appl i cable to the goods in question . It is also noted that in certain recently amended sections of the Tax Code which enumerate goods s ubj ect to higher rates of tax, the items or goods which are newly inserted therein do not i nclude any of the goods in question in t he i nstant case .

Expressio unius e s t exc l usio alterius . The mention of one thing i mpl i es the exclusion of all others not mentioned .

(Dela Rosa vs. Revita Santos , 10 Phil. 148 , 149; Misael P. Vera vs . Hon . Jose F. Fernandez , 89 SCRA 199 , 203; Phil. International Fair , I nc . vs . Coll . of Int . Rev., 114 SCRA 710, 717~ In recapitulation , the Court may now safely conclude that respondent' s position that Section 196(i) .and (m) . correctly apply to the products in controversy is erroneous . We are in no position , or withou t justifiable reason , to 204

DECISION -

CTA CASE NO . 3065 - 10 - depar t fr om the rul ing dated Augus t 9, 1973 , (E h. "K" , s upra) ? f the t hen Commi ssioner of Internal Revenue Misael P. Ve r a t hat said artic les are subject t o the l ower r a te of 10% advance sal es · t ax (then only 7 ~ advance s ales tax ) ~ pl us 25% mark-up .

The payment of the 25% advance sal es t ax plus 5 0 ~ mar k- up i n the sum ofP36 , 086 . 00 i s erroneous and , therefore , r efundabl e to pe titione r Lovs ted & Co., I nc .

WHEREFORE, r esponden t is he r eby orde r ed to gr ant t ax credit or r efund t o peti t ione r t he amount of P36, 086. 00 wh ich i t pa id on May 14, 1979 corresponding to t he erro- neous ly paid 25% advance s ales t ax , plus 50% mark-up on the i mported Pres t cold Condensing Units and Searle Evapo- rate r s .

No pronouncement as to inter ests and cos ts.

WE CONCUR:

205