Uss Engineers and Consultants, I Nc vs. The Honorable C0/1/Fissioner of Internal L?Evenfle

DECISION -

- 2 - r,rhich r,ras subjected to a 35 .~ w.i t:hholding tax aggregating $562, 3.28. 80 (or ?12,130,235.54) as reflected in the Nationa .l Stee.l Corporation's Quarter.ly Return of F.ina.l Income T,_'ix ending December 31. 1981, and duly :t·eceipted by Bureau of In t:erna.J Regvenue on <January 25 , 1982.

The tax cc•.-rresponding to the $300, 000 as deduced from the total payment is computed this Sen !. ce Fee Tax Rate US$- Peso Rate Tax W.i thheld r.,rise:

$300,000 X. ........ •.. 3!5.

$105,000 X .....

] .. /5.!5.

P792, 750 It appears that the grant ()f $300,000 is embodied in an August 21, 198.1 Agreement entered .into by and between the National Stee.l Corporation and the U.S.

Trade and Development Program acting in bebalf of their respective gove1~ments, the Philipp_ines and United States of America, r,:hich provides .in:sof'ar as .relevant that - H.

This l3.greemen t and the Grant r,:ill be free from any taxation or fee:s .imposed under laws in effect in the Philippines.

To the extent that an.v contractor, including any consulting firm, or any personnel of such contractor financed under the Grant are not exempt for identifiable taxes, tariffs, dutie:s, or (Jth e r l evieB imposed under lar,:s in effect in the Ph.ilippines, the Government 740

DECISION -

CTA CIJSE NO. 3726 - 3 - o f the Philippines will pay or reimburse the s:<tme with funds o ther than those provided under this Grant and will not c laim reimbursement f o r such taxes, tar.iffs , etc., under this Grant . On the basis thereo f, petitioner claimed on November 9, 1983 the refund of P792, 750.00 correspondingly withheld on the $300,000. 00 drawn from the Grant, but f or the apparent inaction of the r espondent Commissioner, filed the present petition for revier,r on tlanua-ry 23 , 1984. Thu s .

the ques ti on o f r.rhether or not petiti on er has established a valid claim to a refund r.ri th the respondent Commissioner of Internal Revenue.

The mate1·.i a l facts are relative .Z.v simple .so is the .i s.sue under r esc-,J ve.

And, the .sprouting .impress i on precipi t;ate.l:v broach ed by the petitioner that the tax on th e fees finan c ed out of the grant has been erroneou.sly imposed can hardly be a reas s uring prospect that can readily be reconciled r.rith the affiliating statutory limitations. The Grant can by no means be deemed the authority for a non-tax exempt entity to an enjoyment of the pri vi .lege.

Neither could it be naively viewed as 7 {)

DECISION -

C1~ CASE .NO. 3726 -· 4 - c)f s uc h hrc..,,':ld scope a nd spectrum r.ri th open ended .f eatures a~:: to validly .in:t'use cogni zance t o a c l a im in disregard o[ the proscr.ipti on s o f the r e venue _l t H.TR .

I t need n c.., t be s t ressecl that exempti on from th e common l)unien c.cwnot be permitted to exist out of in .f e rence or vague impl .i cati on.s . Si n ce a refund undo ul..> tecily partak es the n ature of an exempti on, it cannot be ~llowed unl ess gz~nted in the mos t explic.it and categorical l anguage. ( Res.ins, I nc.

v .

IJ.udi tor Genera.l .

25 SCRA 754).

And the that pe t .i t:.i one r , n eith e r privy t o th e Agreement nor a tax exempt enti t.v P e T f::ie has .fail e d to "jus tify its exempti o n t'.V r,1ords t no plain t o be mistaken and t oo ca f. ego l· ic ~'ll to be misinte rpreted." (Reagan v.

Comm.issione r of Internal Revenue, 30 SCRA 969). Be as it may, the National Stee l Corporati on, ..-dgnatory agen c y , ha s .vet to comply with the prestati on in the Agreement.

Thus enjoined, "To the extent that any contnwtor x x x financed under t h e Grant are not exempt f r om ident .ifi~'lble taxes x x x imposed under laws in effect in the Ph ilippines, the government of t h e - 5 - Philippines will pay or reimbu.rse the same with funds other than those pr(wided under this Grant. " The ch .ips otherr-1ise falLing on the petitioner but by the t erms and cr~ndi tions in the Agreement, apparently lie with the National Stee.l Corporation upon which the rec ourse for the refund may be addressed.

The respondent Commissioner of Internal Revenue cannot serve as a convenient "wailing wall'' as would r e lieve petitioner's predicament. The tax sought to be refunde d is legally due and therefore r .igh t.ly imposed a11d collected on petitioner · s realized income on its undertaking. Obviously, the subject c .laim sounds sort o f barldng at the wrong tree expecting the unexpected, so t o ..::pel3.k. HHERF.FORK, petition .is dismissed at petitioner 's costs.

WE CONCUR:

CERTIFICATION I hereby certify that this decision r.fas reached after due consultation among the members of the Court of Tax Appeal s in accordance with Section 13, Article VIII of the Constitution. 74'- ~j8J Presiding thldge Court of Tax Appeals