Court of Tax Appeals
0T:I'Obllc 0 Vlt£, et al. vs. -· vs. ·- Comj'1issioner of Internal Revenue
•t:i'OBLlC
0
vlt£ _.,t!lll.lPJ"tr4Pt
~OURT OF TAX APP£AU
QUI!lt014 CH:-,
l'lEISHIN SHIJc)InNG CO .. LTD .. ,
TOKYO SHIPPING CO .. ,
YS
NEAH.SEA~i
CO .. LTD 01 KYOSE! STEA!1SHIP CO ..
LTD . , and SUNRITZY SHIPPING CO.
LTD. , represented by SORIAMONT
STEAMSHIP AGENCIES, INC.,
Petitioners,
-· versus ·-
COMJ'1ISSIONER OF INTERNAL
REVENUE,.
Respondent.,
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C.T.A. CASE NO. 3531
D E C I S I 0 N
This is H judicial claim for tax credit of
alleged excess payment of income tax in the total
amount of F54 1 589 ~ 38 for the year 1980 by herein
petitioners, all Japanese foreign shipping corpo-
rations, and represented in the Philippines by
Soriamont Steamship Agencies, !nee based uoon the
provisions of the RP-Japan Tax Convention, which
fixed a preferential rate of 1~% income tax due on
gross earnings of the~e shipping companies from the
carriage of goods or cargo from the Philippines.
During the hearing before Us and upon his
t~rn to present his ~ase, respondent did not present
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Dl!.CISION -
CTA CASE NC. 3531
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any countervuiling evidence ~ga in s t peLitioners,
insteud his counsel had firstly manifested that
they were awaiting the comment of the lnternaticnal
r.
Tax Division of his office with respect to this claim
for tax credit until finally he submitted his case
for decision, without the comment which was not
forthcoming.,
This Court is now ccnvtrained to d~cide this
case based solely on the evidence of petitioners
presented to Us by petitioner Soriamont Jteamship
Corporat.ion in behalf of. petitione::rs, said Jananese
shipping corporations.
It appears that petitioners were eng~ged in the
business of international shipning .
All these peti-
tioners are Japanese shipping enterprises, represented
here as aforesaid by the Soriamont StE.':lmship ,.0 enc ies,
Inc.
(herein~fter referred to c1s
SORL\~·iC'N'r for brevity) 1
which is a
domf'~·-.;tic ccrpor;1tion.
(Exhs. H, H-1 to
H-4b; TSN, June 16, 1983, pp . 4. 5, 50-53; ibid .,
Nov. 22, 1983, p. 3.)
During the period from Janu .. ry, 1981 to June,
1981, petitioners• vessels, all foreign registri~s ,
lo ~ded at, and transported sugar, fertilizer , copra
and copper concentrate from, Prnl ippine. ports to
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DECL.J ON -
CTL. Cl:.!:JE !W. 353J
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foreign destination.
(Exhs. K, K-1 to K-7 , I
I-1
to I-4, J , J-1 to J - 4 ; T.s.N., June 16, 1983,
p~. 4,
10, .11, 53, 60.)
These petition rs o.r princjpals
t.
were the Meishin Shipping Co. Ltd . , Tokyo Shipping
Co ., YS Nearseas Co. Ltd., Kyosei Steamship Co. Ltd. ,
and Sunritzy Shipping Co.
(T.S.N., June 16, 1983,
pp
13-48; ibid., Nov. 22 , 1983, pp . 3, 4 0 )
They
have appointed GORIAMONT to represent them with res-
pect to the loading of cargo in the Phi l ippines.
This agency relation is embodied in varicus agenc y
agreements, letters and telex s .
(T.S~N., June 16,
1983, PP • 49-60; Exhs . H, H-1 to H-4b. )
Before any of petitioners • foreign vessels
arrived in the Philippines to load cargo, peti ioners-
principals notifies SORIAMONT by telex particulars
of the date of t he vessel' s arrival , the kind and
volume of cargo to be loaded, the p~rt of lodding,
the dest i nation and many other s.
(T.S.N., June 16 ,
1983, p. 9. )
On the basis of this information,
SORI A ONT goes to various government aqencies and
offices s uch as the Bureau of Customs, lttllnigrdtion
and to secure the needed clearances therefro 1.,
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T.S.N ,
J~ne 16, 1983, pp. 9 1 10. )
SORIAM0NT also filed, ten-
tatively, the declar ation of income and paid the
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DECI.. ... IC-
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CTA CASE N0 .
1~31
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es~imatcd income tax due before the clrrival cf CdCh
of the vessel.
(T.S .. N., June 16, 1983, PP~ 9 , 10 .. )
n the basis of the recei 1_ ts evidencing "Jayment c,f
the 2~% in.come tax on the gro::...s receii_)t to the i;ureuu
of Internal Rr-venue , the varir.us offices then grr-lnted
the clearances or p rmi ts rcq ues ted by SORiidt.GNT .
After l eading the ressels 0~ petltio~ers, the
ex~ct quanti ty of volume of the c2rgo ~rd once the
freig· tage of the v c.sself~ bec::me )<DO'm
•.~:e incon'e
tax d· e ther<'-'on wen:· rom-;;uted a.n(1 c::;r res'I''Ld ingly
paid.
If the ini tia
ar1u ten tat .i. vc tax pdyments
mi'lde were ro ,·:ever short, add l tic ni3. l
,in·,oun ts of j ucome
t ax due were later paid .
In the case ot petitioner Mei~hin Sh nping co ..
Ltd., its vessel, the MS
Prince~s Jurly V3, which is
a n inte rnational cc. rrier,
a.ctu<:~lly i1rrived in the
Philippines on ~arch 26 ,. 1981 (t;>xh ,
l:l) ana loaded
cargo for whirh j t had paid previously, or t entatively
on Deremb~'>r 27~ 1980.,. or before the vessP1
1 s arrival,
a
2~% of income tax on their <;ro,,s
Phili~1'")ine billing.,
under .Section 24 (b) (2) of the Tax
~ode, in the sum
of P14 1 790.75 {Exh. c, C-2 & C-3) 1 Hnd thereafter
h,.ad paid an additional tax of r<'99 s 81 or: E'pril r 1961.
(Exh. C-1, C-4 & C-5 . )
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DECISION -
-~ 5 = Anent petitioner Tokyo Shipping Co., it paid on the gross billings of its carrier in M reh, 1981 a 235% income tax in the sum of P6,937.50, (Exhs. D, " Del to D-6a,) .
With respect to petitioner Y.S. Nearseas Co., Ltd., its interr tional carrier, the M.S. Pine Valley vV79, arrived in the P,ilippines on January 3, 1981 (Exh, B) to load cargo, and it paid 2};% income tax on its gross Philippine billings tentatively, prior to its vessel$ arrival, on December 20, 1980, the sum of P5,392,75 (Exhs, E, E-1, E-2), and in March and May, 1981, it paid an additional income tax of P109,31 (Exh, E=3, E~4, E=4a} and P25,821.,00 (Exhy E~6 to E~10), respectively.
Coming now to the petitioner Kyosei Steamship Coe, Ltd., it paid on the gross Philinpine billings of its carrier, in February, 1981 a 2)% incon tax in the amounts of P18,453.75 (Exhs, F, Fe2 to F-5) and P374.,06; in May, 1981, the 2%% income tax in the sum of P13,306,88 (Exhs. F-6 to F=8); in April, 1981 the 24% income tax in the amount of F10,400.00 (Exhs,F-11 to Pella) and in June, 1981, the 24% income tax in the amount of P27,180.00g (Exh, Fel2 to Fm14b) 303
DECISION «=
CTA CASE NO, 3531.
~~ 6 = ” Finally, with respect to petitioner Sunritzy Shipping Co., Ltd., it paid on the gross Philippine billings of its carrier on June 11, 1981, the 2% ' income tax in the amount of P13,269.13. (Exm G, Gel to G-2b,) Ag aforesaid, all the payments made above were computed by the accountant and who paid the taxes to the BIR on the basis of 24% of gross freight earnings under Sec, 24(b) (2) of the Tax Code, (Exh. &; T.S.N., June 16, 1983, pp. 5=7, 10-11; I.S.N., Nov, 22, 1983, De 44) ;
On January 1, 1981, the RP-~Japan tax convention became effective (Exh. L). On the basis of said convention's Section 8 (Exh. L), which vrovides for the payment of a preferential rate of 1% on its gross Philippine billings of P5,459,027,50, and not 23%, there was, therefore, overpayment of income tax of P54,589,39, and, consequently, petitioner SORIAMONT filed its claim dated duly 29, 1981, for tax credit of said excess payments (Exh, A; T.8.N., June 16, 1983, pps 6 & 7; T.S.Ney Nov. 22, 1983, ps @) in the amount of P54,589,38, distributed to petitioners as follows:
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DECISION =
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= Tie
Meishin Shipping Co. f 6,036,22 Y, Tokyo Shipping Co, 7gCdadwes :
YS Nearseas Co., Itd. 12,529,22 Kyosei Steamship Co, ; 27,885,04 Sunritzy Shipping Co, 5, 307,65 There being nc acticn cf respondent Com~ missioner cf internal Revenue on the claim for refund, petitioners brought this judicial claim to this Court, In the special and affirmative defenses of his answer _ the Petition for Review (Judicial claim for refund), respondent Yommissioner of Internal Revenue admitted that the total amount of P54,589,38, as alleged overpaid income tax sought for tax credit in petitioner SCRIAMONT's letter dated July 29, 1981 was prid by petitioner, Bue asserted, as its only sukstantial defense against the claim, that since the RP-Japan Tax Treaty took effect only en January 1, 1981, it cannot be a basis for petitioners' claim for tax credit of the taxes that were accrued and paid before January 1, 1981, In his defense, respondent 390 i ies “ry 34a ood awn pales a
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DECI::>ION -
CTJ, c,.,t;E. l\U. 3531 - 9 ·- Jap3nese international carriers sl1al l he entitle~ to a pr~fArontial tax treatment of pey ing 60% of is normall y 2~% inccme tax rn the gross Phili~pine bi.lling s on car9os lifted from p·hili;·nine pcrt.s , or whi c h is equal only to 1~% on such grcss Philippine b illings of these Japanese intern2tional carriers . their gross Philippine billings 6 res2o dent does not interpose his disagreenent 1d th t.'e ti ticne r s
Ja ~Jancse
in t:.ernc: tiona l carriers, excc'pt only to ~' :'IY 1 in effect, that these 2~~~ income tax paid by two ( 2) pet i tionPrs, t he Meishin Sh i pping Co.~Lt d . anJ the Y.S . Nearsean Co., Ltd. i n the ar:-tounts of l 14,790 .7 5 and .1:-' 5 1 3~2.75 1 respectively. ca1not ~0 refunded becau~c these ~ere. payments m~de prior to January 1, 1SB1 1 when the ;:jfc resaid t.reat.y became eff0;ctive . ~I0 e::.r·e in f ull agreerPent. 1d.tl-i fH:t.i t:.i.or.ers tJvi.t they ~r e all 8ntit l ed to the clain for tax credit of thc. total :1um of t'54 , 589 o 3fi , repre:-; ,nt. Jng errorH'lCu~ly ove rpaid inc(mc taxes~ T~e p~yments made by peti- tioners Meishin Shipping co~ and ~he Y.S. NPflrs~as Co!', ·both on December 23 , 19BO, ".-:e.r<~ tcn·tatj.vely macJe en those d<"Ates , v.•hich lic.(lili·r.ies fr r incorre \ 35 '7 L~;CTS ICl·;
CJ~ CAGE NC. 3531 -· 10 - t.c:.xes <::cc1: u.cd actu<:1lly at ·the Cd tes i. \ :c·ir vesuelt:
MS Princess Judy V3
~na M~ Pine Val l ey V79 arrived and January 3, 1981 1 respectively . ( I~xh ~ B . )
Co. , Ltd . and Y.S . Ncarsees Co . , Ltd . maturerl on t~~ said dates cf errival of sa i d vessels to load cargo cH:c} , benet~ ~ t'··,rned :i ncor.-1e ~:}:o.rt-:frorn ·'·I riel thereaftc~r ~eparted to Gther foreign destinations . which arrivAl ·yea.r. 198 1 in que::3ticm i s P5,45Si , 0~>.7 . 50, abd t he norrnal ·tax o f 21~<::~. under ~)ect i on 24 (1·.) ( 2 ) of tl!e 'l''X Ceodc \ 358 a on “ re cha dake ge ‘ 44 « 6 ety: . te , 6 , . vs by mt ra euy eh . 1 - : . sha F 5 4 pooan 4 ‘ et . * . t mi ks ge bo LCR ate hoor . rr ee + re : : ~ ;
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