San Carlos Milling Co., Inc. vs. I the Acting Commissioner of Internal Revenue

DECISION -

- 2 - CB Release Certi 1 icate No • 122677 (£xh. .nc" J. . :r imported machinery and ad~ itional p rts arriv d at the port of Manila on January 4~ 19a 3.

A of the importation, petitioner p id the ount of P~07,539.00 evidenced by ;custom Of-fici 1 eceipt.

No.

122677 · (Exh.

"F"J of represented customs duty and I compensating tax (£xh, , "F'!..1"). I Through its letter o1 ·June wnich o~ the petition ~or r~vi~H), r c iv Commissioner of Internal Revenue on June 28, 1983, petitioner filed a claim -for re-fund/tax credit o1 the amount of P204,649.00 on the ground that it is allegedly exempt from payment of th compensating tax until June 30, 198~ by virtue of P.O . No. 791 as amended on Augu$t 13, 1980 by P.O. No . 1710.

Petitioner add that on Janu ry 22, 1983 then President Ferdinand E. M rcos, in a marginal ~ no te on the Januar~ 11, 1983 1 t ter o1 Manuel H. Nieto, Jr., Pres~dent o~ Bukidnon Mi,ll i ng Co., Inc.

(£xh.

"t'~ J , · apprdved proposition to interpr•t P.D. No. 11 0 r nti""iJ full exemption until Jurle t 30, 1985';

tarif1 t import tax, cuwtome and duties nd compensating tax to all impo~tations ot plant 39 •• .)

- 3 _ , machinery, spare parts and equip nt directly d actually needed and to be used exclu$ively in th manufacture, milling, pro~ s ing or r•~ining of sugar.

Conscious of the ruie on t.he pr script.ive period of two yeans for j~dici 1 taM \ ' alleged to have been e~roneously lly collected as provided in ~ctions 292 ·and 295 (no Sees. 204 and 230) of the N tional Intern 1 ' I I v nue Code, petitioner filed thi ' p titian on July 18, 1984.

The dominant issue inlvol ved in"" this 'c:a whether petitioner is e xempt from p yment o'f 5X compensating tax on the tlasis of P.b.

No.

1710 t which purports to amend P.D L No. 791. I It is not disputed that P.D~ o.

791 , effective September 3, 197~, gr nted eMemption to sugar mills from compensating tax, among ot ers, in ~ res pect to importation of plant mac:b~n ry,.

spar parts, and decree, the other equipment.

As

I '

exeMption is l until Section 1 of the decree reads: "SEC. 1.

Any person, company or corporation who engaged or shall engage · in of manufacturing, milling, refining of sugar shall' b ~0 stated i i t j DECISION CTA CASE NO. 3910 - 4 .- t K, !j the payment of sp~cial import compensating tax and customs nd duties in respect to import tion of machinery, spare parts nd equipment effective upon appro al Decree until June 30, 1990." f l· a ·ri f ' plant other of thits Respondent contends, however ;

hat importation was made in 1~82 outside th ori~irial I period of the tax-free t iMportaticr' priv11 ge I granted under P.O.

791. \ And while P•titioner argues that P.D. 1710, promulgat on Augu t . 1.3 , 1980, which amended P.D. i791, restored the taM- exemption privilege accorded to importations of sugar mills machinery, spare parts nd e uipment, respondent insists that reliance upon P.D. 1710 is · misplaced.

Respondent poihts out th t !lt.l.,4 qu nt to P.O. No • . 791, P.D. No. 11352 w s prcMDU g t d on April 21, 1978 imposing 5% customs t:futy and ~;.

internal • revenue a~l~ l --~i~m~~_r ,t tions exemRt~~f~r~o~m~~c~u~~o~ m~s~~d~~~-- and/pr I taxes . on first paragraph of sectio~ 1 of pertinent.

To quote:

' I I "Sec. 1 All importation presently eMempt from customs ' du and/or internal revenue t x s under provisions of any general or i 1 shall be subject to a 5Y. custOM duty

57. internal revenue takes subject to 41 ..

' - 5- same limitation~ and condition prescribed under such law, if any. The duty and tax imposed her in shall computed in acco~d ance with t applicable provisions of Tariff an Customs Code, as ' mend d, ;jnd t t .·;

Nationa 1 Internal Revenue Code bf 1f;''17, , • respectively."

Through the languabe of the abovebit.

paragraph, the decr&e app r to mal<!

I .

I coverage for its tax impdsi tions 1 by ':! I all importations which are presl!fltly· !, l( the provisions of any g neral or Still, We believe that · P.D.

No.

1352 include P.D.

No. 791 as among those to which ...

it shall not apply nor among those considered r p aled or amended by it.

We refer to the oth r provisions in section 1 and section 2 of P.D. No. 1332: "xxx

XXX '

)()()( "The customs duty nd interna l revenue taxes imposed under th i~ ' sect i on sh 11 not apply to the following importations:

, "1.

Those which are exempt in pursuance of , or in compliance . with international treatieus or co i tHnts such as the ADB- RP Ag~ ement ( 19&6.lt, lt tw ' 1947 Convention o~ Priv~leg•* nd Immunities of the United Nations ·net ti t•· specialized agencies, the United St ttts Agency for lnternati6nal Dev 'lo t, ..... AP Agreement;

the 1947 Military .B Agreement; and o t her ~imilar tre tie commitmentst

- 6 - "2.

Those which re Section 17 of Presidential D "3.

Those which r Section 12 of Preside~ti 1 exempt un er _ere (). a7 I "4.

Section 215J Those 12 of which ar Pr sittent· xempt un cr ..

"5.

Those whichl r eM Section 1 of Presiden~ial Deer I "6.

THose which' re e Section 1 of Presidan~i 1 Deer I I "7.

Section 572;

Those which1 are exempt 15 of Presid nti 1 Deer "8.

Section 604;

Those 15 of which. are exempt und r Presidential Decree No.

"9.

Those Section 1~ of 666J I ...

which • are exempt President! 1 D cr I nder No.

"10.

Section 768;

Those 76 of which ' are President! 1 I xempt und r D cree Ho. ,· "11. Those Section 76 of 783;

which are Presidential "12. Those 'which are Section 76 of Presidential 972;

Kemp ·und · Dect-ee · I I "13. Those which . are tncafltp Section 18 of Republic Act No. ~623 I usEe. 2.

The pertinent pro- Vi!l'iona: of Presidential Deer e No. , 218, Presidential Decree· No. 26<?, President! 1· . Decree No. 348, President! 1 Deel"' No.

413, . Presidential becree No~' 440, , Presidential Decree No. :535, Presid t1 1 Decree No.

538, Presidential cree ' · • 634, Presidential Decree No.

6$1;

43 .)

- 7 Presidential Decree No. 690, Pr sidenti 1 Decree No.

926, Presidential, D c:ree 990, Presidential Decree No.

!

Presidential Decree No.

11~9, • Act.

No.

720, Republic Act.

o.

Republic Act. No. 4156, Republic Act . No. 5186, Republic Act.

No .

6135, Rep blit Act. No.

1161, Republic Act.

No.

1370, Republic Act. No . 2640, Republic Act No .

3054, Republic Act.

~o .

4690, Aepui:J~ic Act.

No.

4850, Repub*ic Act.

No,.

4 71, Republic Act.

No.

6012 ar 1 her by repealed or amended ac ordingly.'" I I On May 31;

1978, P.

1D.

No.

1395, a d ree I amending P.D.

No.

1352, 1took ffect.

· Shortly thereafter, P.O. No. 1522 'amending P.O. No. 1352, followed on June 11, 1978. No m ntion of P . O. No. 791 can be traced in these decrees in their I enumerations of repealed ot- amended acts or· those to which they would not apply. The resolution of the ma in i~sue hinges therefore on .

!' .

whether re.ponde nt i s correct when he asserts that the promulgation of P .D . No. 1352 as amended caused the repeal of P.O. No . 7 91. If this .

is s o, then P.O.

No. 1710 cannot extend P.D. · No. 791; quite opposed ·to the 'reason and pol icy which I I the for~er states in its pr~~mble. We disagree with the ~Ctssertion o'f respondent I that P.O. No. 1352 repealed jP.D. No. I 79i1..

' To our mind, P.O. No. I 791 is a :special its restrictive character furthe r e nhanced by j DECISION CTA CASE NO . -slO - 8 - limitation that the exemption t o be enjoyed by sugar mills shall apply onl~ to t he importation of plant machinery, spare parts and other equipment directly and actually needed and to be used in the !

. Thf:!

.. 0.

development and operation o'f the sugar mill. expansive interpretation tel eff ct repea l wf No. 791 s ought by respondeN to be accorded' to the general provision• found in 1 1 P.D. No. 13 2 ~heA · ~he II said decree subjects to tax all lmpor~at~ons prese ntly exempt from customs internal revenue taxes Under the p~ovision• of an~ general or special law cannot be suppbrted by this Court.

Nor has it bee n favored in l aw. It has been the constant holding in law that repeals by implication are not favored · unless a manifest indication of t~is leg is lat i ve · pur~ose is unequivoca lly expressed or a c tua lly contemplated (Ville gas v. Subido .• L-31711 .• September .30 1 1971, 4 1 SCRA 174).

f Recently, th• Supreme Court reminded I that implied repeals are not C..JSUally to be assumed I (Larga v. Ranada, G.R. No. ~9576, Augu:t t ·J,! 19 8). i ' It has always been streised that . ~n ~a•• of a mbiguity of the st~tute, ~~~islati~e i ~t n \ is the source of the comp~omisa. This Court' s · duty is t.'o endeavor to reconQile I I _, --

- 9 - th~ provisions to give sensible eff ct t o both provisions (Larga v. Ranada , supra).

We se it then that the comprehensive 1angu g of P. O.

No.

1352 as amended referririg to all impbrt tions part ia 11 y or tot a 11 y tax exempt under any g ner.a.l or special law was dic~ated by the n d to encompass the many subjects which w ) ., lin II:

Nowh re 'was l in the succeeding sections. I t 791 indicated among thos~ repealed or a ended.

P.O. No. 791 relates to the specific subject matter ' of importation of machinery and equipment by sugar mi 11 s for their operation and deve"iopment.

The lack of allusion to P.O. No. 791 in the repea ling clause of P.O.

No.

1352 as amended r veals the intent to save the decree from repeal. , ( i th Be11 4 Co. v. lfun. of Za•boenga, 55 Phil. 466 , 1930J.

The fact that there was enumerated repeal of certain sections of several acts evinces an intent 1 no t to repeal by implication prior special , . laws.

I (Sutherland, Statut.ory Con ·struction .~ Vol.

1A PP• 245- 247 citing Barry v. Knight , 296 11,1.

p HE 2d 999, 1938.)

Upon the other hand, We deem th t the ab of P.O. No. 791 among those mentioned as to hich P.O. No. 1352 as amended shall not pply wa due to .)

,.

- 10 - the fac:t that the former Wa Self-lim,iti Q I ith a period of effect only until J e 30, 19SO·.

:r legislature is presumed to h v knoWn of th existence of prior statutes and where t!..h '• Jiater !

general statute does not pres nt n ~r~e cil~ble tonflict the prior sp 'cial •tatute 'will ~ be I !

,, • f~ construed as remaining ln 1 ~11 ct a q4 I I to the general · 1~u• (U.s. ~- Palacio, .r3 2(>8, .

1916).

Never the 1 ess , even if the irreconcilable, it has been th@ rul that the special law control!> the 1general law. specialibus non I -.

derogan t. , This rule i!$ truet ev n if the terms of the general law m y b b~oad eMough to include the matter in th ~pecial law.

I (Villegas v. Subido, supra). In this light, it' is there fore Justified to infer that P.O. No.

1710 should be ,construed to have dispelled all doubts as to the continued • ex i stence of P.O. No: 791 ~espite tha ' eria~t nt of P.O. No. 1352 as amended. ! This is as ;it should b for the legislature is presumed , to intenq · tb I ' [.

I ' • achieve a consistent body of law (U.S. v. I' l cio, P.O. No.

1710 af~irmed : the exi~t ce of supra)~ P.O. No.

791 by reciting I the grant pf eK I ption embodied in the latter, in ' the proc •• stating I 41 ,I ,) I I

I '

- 11 - I I reason or occasion for the .amendment, nd that is, to extend the effects of P.O . No. 791 until June 30, 1985.

As c learly and plainly xpressed in the preamble or e xplanatory no.te (WHEREAS cla\.1 ) of P.O. 1710, the purpose or mbtive of the dec r ee w ~ "to ex tend the e><emption 1er iod years".

P .D. 1710 w 9 mot vated I for anot ther lfor II to the r five state policy to ! give impr' t us growth a nd deve lopment o the suga~ ~ridu i I ' .

Unquestionably, i f the language P.O. 1710 is to be followed and its intention fulfilled , P.O. 791 wag ,.

I no t repealed by P.O.

1332 so that ~etition rjs importation involved in this cage ·1· exempt u d~r ·1 P.O.

791 as extended by P.O .

1710.

to hOld Andi as otherwise is to incur sel f-.c:ontrad i c:tion. i f this is not enough, .the then Pr id nt of tHe Phi 1 ippines through a marginal note in the 1~83 letter of Manuel H. Nieto Jr., i n ef fect affirmed , t he inten t of P.O.

No~ 1710 to gr nt t~x e~~mptidn , to particular importations • I a pproving of the request fo~ . I Sugar Milling Co., Inc. whi~h as amended by P.O. No. 1710. , of sug ~ mills by exemption "'of $ukid tJn t invoked P.O. No.

Although We agree with ; re•pondent that Manuel H. Nieto Jr.'s letter watt !only •pe•king 1'or and t .)

- 12 - describi ng the circumstance s of his co pany , it is clear to Us that in said letter the b sis of his request was the interpretation of the int nt of P.D. Nos. 791 and 1710 such th t. th cent nt of the letter has important relevance in the inst nt c ee. Therefore, confirmation of his propos! ti.on by th I I then President of the Phili~pines can onlY be t Wen I to mean that these decr-ee would h {,e nt:> I •• I interpretation.

Being thus illuminat d, the .

I argument on retroactivity I by r pond nt is nQt I appropriate in this case. What is apropo here and shou ld finally seal thi9 controv r Y is the certification by the then Ministry of Finance that petitioner is tax exempt from the p yment of the 5% compensating tax imposed under P.O.

No .

1352 as amended (£xh.

"J").

• This opinion rests on Memorandum No. 10-83 dated January 28 , 198~ by the Presidential Executive Assistant, Office of the President (Exh, "H"),' the latter i t el f a rightful , comprehension of ~he essence of the aforesaid letter and margin•l note. Surely• thi• i.~ ~~ th · ~ I instance where the opinion of an offici al government charged with the duty of ad~~tini l and enforcing the law deserves great w ight' rT ~.

Wun.

o~ Pagbilao, Qu•zon, L-14264, April 30~ 1 6 , 7 SCRA 887).

.)

WHEREFORE, the claim for refund/tax credit by petitioner San Carlos Milling Co., Inc. in hereby granted.

WE CONCUR:

Y —

CONSTANTE C. ROAQUIN . Asséciate Judge ts Associate Judge ~ | CEERTALPFICATION £ I hereby certify that this * dent et cont was reached after due consultation among the members of the Court of Tax Appeals in accbridance with | Section 13, Article VIII of the Conmts tutions i> Hie AMANTE FILLER Presiding Judge Court of Tax Appeals