t, et al.

DECISION -

- 2 - from Petrop~il cor poration, a subsidiary of the Ph ilippine National Oil Company, a total of 60 , 701 barrels of locally refined or processed diesel oil and paid an aggregate of P3 , 40~863 . 74 , the imputed customs duties c orr esponding to the quantity of imported crude oil o r 2 , 808,945.8 4 lite rs . On October 6, 1981, petitione r filed with the Col- lector of Customs a claim for duty drawback amount- ing to 99% of t he s a id payment o r P3 , 376 ,755 . 1 0 pursuant to Section 106 (a ) ,_ S U££.~· The claim was denied by the Collector of Customs in a ruling dated Novembe r 26, 1981, wh ich on a recon sideration by the petitioner, the den ial was sustained by the res- pendent Commissione r of Customs o n March 19, 1982, stressing, among other things, that the pe t itioner corporation purchased domestically produced oil on which no duties may be imposed a nd the word "refund" or "drawback" assumes that t he c l aima n t thereof is the person or e ntity obligat ed to pay and has actually paid the duties or tax under the law , which are circumstances no t o btaining in t he case. Hence this pe ti t ion .

By and large pe tit ioner presents the proposition as reason of the appeal that the fuel con templated in Section 106(a) ~ s upra , for purposes of drawback 23~

DECISION -

CTA CASE NO . 3481 - 3 - may be in whatever form and kind and regardless of whosoever the importer provided the ultimate user qualifies.

"'rhus it is not necessary for a valid duty drawback claim that the owner or operator of qualified vessels be the direct importer as he could be a mere purchaser of the imported fuel used for the propulsion of such vessels."

{Yangco v. Insular Collector of Customs, 51 Phil. 348) ~ Moreover, "there is no legal impediment to the implementation of Section 106 (u) _of the T<:~r iff and Customs Code of 1978 with respect to vessels and watercrafts engaged in commercial deep-se a fishing."

(Minister

of Justice Opinion No. 176 , s. of 1981) ~ The present case is one in which petitioner•s vessels qualify for duty drawback having come within the purview of the ruling that, "vessels engaged in deep-sea fishing and which carry their catch to a port for sale are engaged in coastwise trade" (Commissioner of Customs v. Borres , et al., 100 Phil. 625) _for purposes of Section 106(a) '· suora. But, equally determinative of the sense and extent of the coverage of the privilege which is implicit in the meaning and explicit in the terms of the afore- said provision are the operative acts of i mportation, actual use a nd payment of the corresponding duties 233

DECIS I ON -

- 4 - on the impoFted fuel upon which the right to a re- fund may be held or exercised.

Basically pres- .

cribed in the implementing regulations, inter al ia , is that claimant must show evidence of the "import- ation and payment of duty and such other particulars about the vessel and the loading a nd use of the fuel as they may deem necessary."

(Par. V, Customs Administrative Order No. 235, dated February 10, 1959) •.

Restated, "Drawback privilege under Section 106 (a) is quite clear and needs no interpretation . The same may be a vailed of only if the fuel is im- ported and used in the propulsion of vessels. The identity and quantity must be established, duties thereon must be paid , and subsequent use of the s~me in the propulsion of vessels must be shown before the privilege of drawback under the section could be availed of."

(2nd Indorsement dated March 3 , 1981, Commissione r of Customs to the Minister of Finance)~ All that need be stated is any s uch claim for entitlement must prove compliance with the terms and conditions peremptorily required by law and rules lest the integrity of colle ction of lawful dues be placed in t he quicksand of self-interest, so to speak.

The circumstances of the petitioner in the case at bar appear remote and removed from the activities 234

- 5 - normall y involved or necessar i ly connected \v :_ th the undc rtQking contemplated in Section 106(a) of the Tariff and Customs Code, sup~. Thus:

First, petitioner is neither the importer nor the actual use~ of the imported crude oil a nd in no way obligated to pay the customs dutie s nor any other import liabilities on the importation there - upon a duty drawback is addressed and brought to bear.

As disclosed in the recor ds, the fuel needs of petitioner's vessels were of the locally pro- cessed diesel oil purchased from Petrophil corpo- r a tion and/or Pilipinas Shell Petroleum corporation. For the period in question, petitioner allegedly consumed 60,701 barrels or 9,650,520 liters of diesel oil with a total billing of P3, 410 ,863.74 purportedly represent i ng due payments for customs duties on the equivalen t qu antity of crude oil o r 2,809,945.84 lite rs.

Be that as it may, a d0arth of competent information, however , cast a pall of uncertainty over the specific purpose a nd natur e of the said payment upon which proffered to be tacked petitione r Frabelle Fishing Corporation•~ refund claim to the extent of 99% thereof pursuant to the drawbac k provision of Section 106(a) ~supra. It is too much of a stretch to hold petitioner 23b /

DECISION -

CTA CASE NO . 3481 - 6 - accoun tab l e much l ess answerable for the import liabi- lities on an· importation it wa s no t privy. It ' s pay- me nt f o r the loca lly purchase d d i e sel oil doe s not operate automatically to prove its e ntitlement to a r e f und of cus toms duty.

The rule seems settled that a 'tefund undoub tedly partakes of a nature of a n exempt- ion, it cannot be allowed unless g ranted in the most explicit and ca tegt i ca l language " (Ties in s , Inc. v. Auditor General, L- 17888 , October 29, 1968 ; Commis s i oner of Inte rna l Reven ue , v. Guerrero , 21 SCRA 180; Union Garments Co. , I nc., v . Cour t of Tax Appe als, 45 SCRA 304 ; Republic Flour Mills , Inc., v. Commi ss ioner of Internal Re ve n ue , 31 SCRA 520) '· be cause the "law does not look with favor a t a x exemption and that he who would seek to be thus privileg e d must j ustify it by words too plain to be mista ken and too ca t egorical to be mi sinte r preted ."

(Reagan v. Commissione r of Internal Revenu e , 30 SCRA 968; Ohio Life Insurance & Trust Co.,

v. Debolt, 60 Howard 416; Commissioner of I nte rnal Revenue, v. P.J. Keiner Co. , Ltd., 65 SCRA 153) ~

We

are not prepared to lend c redence t o a claim based upon vague implic ations (As iatic Petroleum v . Uanes , 49 Phil. 466; Collector of Inte rnal Revenue v. Manila Jockey Club , Inc. , 98 Phil. 676; Wonder Me chanical Engineering Corporation v. Court of Tax Appeals, 64 SCRA 23ti

DECISION -

CTA CASE NO . 3481 - 7 - 563) ~ nor to confu se about what seems fea si ble with about what· is legally t e nable .

(Marinduque "Mining

& Industrial Corporation v. Commissioner of Internal Revenue, CTA Case No. 3019 , March 27, 1981) ~ The subject payment conveys nothing more t han an i ndica- tion that the same could have the merit of being easily understood and readily applied sufficient to meet the effec t ive price of the fuel sold. As characterized in an analoguous case, "It may indeed be that economic burden of the tax finally fa lls on the purchaser: when it does the t a x becomes a part of the price which the purchaser must pay. It does not matter that an additional amoun t is billed as tax to the p urchaser .

The effec t is s till the same , namely, that the purchaser does not pay the tax . He pays or may pay the seller more for the goods because of the seller's obligation , but this is all and the amount added because of the t ax is paid to get the goods and for noth i ng else ."

(Philippine

Acetylene Co . Inc. , v. Commis s ioner of Internal Revenue, 20 SCRA 105 6) ._ Just so and aptly enough.

Second a nd connected with the q uestion just discussed is that the domestic sa l e of the locally processed d i esel petroleum product does not in it- self create liabilities for customs duties or other 23'7

- 8 - i mpor t c harg e~.

For tax purposes , the transaction is governed by the provisions of the National Inter nal Revenue Code , among which, viz.:

"Speci fic internal revenue taxes o.pply to thing s manufactur e d or pr oduced in the Philippines for domestic sale or c onsumption (Sec . 134) ". which "Specific taxes on domestic prod uct s s hall be paid by the manufac t u re r, producer, owner or per sons ho.v ing possess ion or the so.me (Sec. 135) ". and "On fuel oil, commercially known as diese l f uel oil, and all similar fue l oils x x x s hall at t ach to this f ue l oil a s s oon as it is in existence as s uch (S ec. 156 ) •. "

The privilege petitioner seeks to enjoy comes as a random quirk a nd sharply at odds with the levie s normally attributed to the instant tr a nsaction. Third and even more disturbing is the f act tha t petit ione r would prove its claim by simply drawing an inference over the circumstantial clout of "r eceipts and i nvo i ce s" as thus encapsulatffi a ll the due payments of customs dutie s on its local purchases of diesel oil as ascertained and determined, by Fetrophil andPilipinas corporations.

Such could be a maudlin rendition of a self-serving denouement which ne ither i mparts pla us- ibility nor serves muc h of a justification for peti- tioner'g cause .

The action denegates a responsibil ity primarily charge the Bureau of Customs, i.e. , "The .

DELISlON -

CTrt CAuE Nv . 3481 - 9 - ~ssess me nt and collection of the lawful revenues from imported a~ticles and a l l other dues , fees, ~harges, fines and penalties accrui ng under the tariff a nd cus tom ~> lavlG ."

(Section 602(a) ~Tariff and Customs

Code)~ And, is "tantamount to usurpation of an exe- cu t i ve function."

{MERALCO Securities Corpora tion v . Savellano, 117 SCRA 812) ~ We cannot validly infuse cognizance on a n "assessment and collection" effected thru a n inof f icuous panache, much less substitute and i ndulge in a n amorphous and unworkable r ule l est we suffer the corner stone of effective collection to petrify at the cost of animating principles tinged with strong is s ue s of public policy that taxe s are the lifeblood of the gove r nment and their prompt and certa in availability are an imperious need."

(Com-

missioner of Internal Revenue v. Goodrich Interna- tional Rubbe r Co. 22 SCRA 1256; Commi ssioner of Internal Reve nue v. Pine d a , 21 SCRA 105; Collector of Internal Revenu e v. Yuseco , 2 SCRA 313; c i ted in Manila Bank ing Corporation v. Commissioner of In- ternal Revenue , CTA Case No . 2993, October 30, 1981) ~ 'l,he cited decision in the Yangco c ase (51 Phil. 348) ~ offers neither a controlling nor an illu- minating precedert.

What petitioner Yangco pur chased from the Asiatic Petroleum Co . was the imported 239

DECIS ION -

- 1.0 - liquid fuel itself for which i t paid the customs dut i es s ubject of the claim for drawback.

We

do not reach the same situation in the case a t bar.

Petitioner Frabelle Fishing Corporat ion bought the diesel oil from the local refineries upon which no duties may be imposed and logically, no assessment, much less collection, can be made upon which a refund can validly apply and effective ly operate.

Accordingly, petition must have to focus on a different expectation, not what it expects by way of entitlement but what it is entitled to expect from a claim in gross error without factual and legal basis.

WHEREFORE, finding the petition to be without merit, the same is hereby dismissed and the refund sought denied, with costs.

WE CONCUR :

au~-li _£;:)_ /

AMANTE~

Pr e si~~ J udge

CON

-

• ROAQUIN

'e Judge 240