Republic of the Philippines Court of Tax Appeals H Manila Av Ay Gi Lver Swan Manufacturing \y Company, Inc. vs. The Commissioner of Internal

DECISION

This is an appeal from the decision of the res- pondent denying petitioner's claim for refund of the amounts of #10,137.57 end #16,737.39, representing the edvance sales tax and sales tax, respectively. (Par. ll, Stipulation of Facts, pp. 35-39, CTA reese, hereinafter referred to as Stifacts) The petitioner ise engaged in business as a manu- facturer of soy sauce, worcestershire sauce and canned Salted beans. (Par. 1, Stifacts) Om February 7, 1957; the petitioner filed two separate applications with the Seeretary of Finance for tax exemption of its products under Republic Act lo. 901, ome for soy sauce and worcestershire sauce, and the other, for canned salted beans, both of whieh were disapproved on April 24 and June 1, 1957, respectively, because “the manu- facture of soy sauce and worcestershire sauce cannot quelify as a new industry," and in the case of canned Salted beans, because the total cost of imported raw materiels to be used in the manufacture thereo! will the maximum allowed by lew. (Par. 2, Stifectay pp. 139-15%, BIR ree.)

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Case Bo. 628 -2- Om August 29, 1957, the petitioner filed a request fer reconsideration of the disapproval of its applications for tax exemption. Gn (ctober 15, 1957, the Secretary of Pinance partially reconsidered — his decision by granting the petitioner a tax exemp- tion with respect to the manufacture of soy sauce only, but reiterated the disapproval of the application for tax exemption of worcestershire sauce, (Par. 3, 8ti- facts; pp. 155-160, BIR rec.) and on November 26, 1957, the Geeretary of Finance also reiterated the denial of tax exemption with respect to the manufac- ture of canned salted beans. (Par. +, Stifacts; p.161, BIR rec.)

The petitioner, im its letters dated December 17 and 19, 1957, both filed on January 9, 1958, requested for further reconsideration of the said denials, and in his two letters both dated March 28, 1958, the Seeretary of Finance finally granted the petitioner a tax exemption for the manufacture of worcestershire sauce and canned salted beans. (Par. 5, Stifacts; pp. 162-167, BIR ree.)

Before the approval of petitioner's applications for tax exemption, it imported and received from abroad certain raw materials which were used by it in the sanu- facture of soy sauce, (Par. 6, Stifaets; pp. 118-119, 131-132, 168-187, BIR ree.) and the petitioner paid the total amount of ®10,135.57 as advance sales taxes 4014

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Case lio. 628 a on the said importations. (Par. 7, Stifactss; pp. 16-24, BIR ree.)

For the period from February to July, 1957, inclusive, the petitioner filed the sales tax re- turns for the sales of its manufactured products, 1.@., SOY Sauce, worcestershire sauce ani canned salted beans, as required by Section 183 of the ‘ax Code, and paid thereon the total amount of #16,737.39, as 7p sales tax preseribed in Section 186 of the same Code. (Par. 8, Stifactss pp. 36-41, 98-101, BIR rec.)

Om October 27, 1955, the petitioner filed with the respondent, its claim fer refund, dated Cetober 23, 1958, of the sums of 212,428.57 and #21,9%0.26, representing the adwance sales taxes paid during the period from March 5 to September 30, 1957, and the Sales taxes paid during the period from Mareh ll, 1957 to February +, 1955. (Par. 9, Stifact, pp. 53-56, PIR ree.) Im its letters dated Hovember 11 and 13, 1950, the petitioner amended its claix for refund dated Oetober 23, 1958, by segregating the anounts paid before August 27, 1957 = the date of commencement of petitioner's tax exemption with reapect to the sanufacture of soy sauce as fixed by the Secretary of [inance - fron these paid after said date. (Par. 10, Stisacts; pp. 58-60, BIR ree.)

The respondent, in his letter dated November ik, 1958, whieh was received by the petitioner on January 19, 1959, denied the latter's claim for Deeision:s<- Case me. G28 ee refund of taxes paid prior te August 27, 1957 on the ground that they are not legally refundable, whereas, a8 regards the taxes paid after said date, the same were referred to the City Hevenue Officer for verification. Consequently, only the amounts of 710,137.57 and P16,737.39 representing the advance sales and sales taxes paid before August 27, 1997 are being claimed im the present petition for review. (Par. ll, Stéfdets; p. 65, DIK rec.)

The only issue in this case is whether or not uw the benefits of tax exemption should retroact to February 7, 1957 - the date ef filing of the appli- Cations for tax exemption, or only to August 27, 1997 <- as fixed by the Secretary of Tinance as the date of filing of the request for reconsideration.

The law governing this case is Republic act Ho. 901, whieh revised Republic act Bo. 35, entitled “An Act Authorizing the Exemption of New amd Necessary

Industries From the Payment of the Internal Revenue

Taxes," particularly Sections © and 9 of said act, whieh provide as follows:

and necessary ustries under this Aet ap-~ pro of the bare rag or exemption *y _ rg ng § of } it appears : exemptible under this bet a gon Pe Fo s a eaaariante of exemp- tion may be issued." (tnderseor ing supplied.)

1 gee pestedons:

Case No. 628 -5- To our mind, the language of the law applicable te the case at bar is clear, unambiguous, and does not need any interpretation nor construction. (Government of P.I. v. Monte de Piedad, 35 Phil. 42) It expressly provides that “the benefits of exemption of new and ne-~ eeessary industries," like the petitioner herein, “from the payment of all texes x x x shell, upon the approval ef the application for exemption by the Secretary of Finance, retroact as of the date of filing ef the ap~ plication for exemption.” (see. %&, Rep. Act lio. 901) And to erase any room for doubt as to the date of fil- ing of any application for tax exemption, or in other words, the date of effectivity of the tax exemption, =-- the law further requires that “upon the receipt of the application (for tax exemption) by the Secretary of Finance, the date and time ef receipt therefor shall be noted". (See. 9, Rep. det Bo. 901) In the present case, it is an admitted fact that the applications for tex exemption were filed on Februa~ ry 7, 1957. Accordingly, applying the law to the ina~ tant case, we are of the opinion and so hold that the benefits of tax exemption ef petitioner Silver Swan Manufacturing Company, Inc., a3 a new and necessary industry, should retroact to February 7, 1957. ‘The fact that the Secretary of /inance has fixed August 27, 1957, as the date the tax exemption should commence simply because it was the date when the request for reconsideration was filed, it net binding upon this 404

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semiia Cua Case to. 628 ‘ Court (feppei Lnaag7, v. Yateo, 79 Phil, 496) for wnatever action he has taken on the matter shall be Walild oniy when not contrary to the express provi- Sions of hepublic Act No. GGl. (Art. 7, Civil Code, Walter i. Olsen & Co. v. Aldanese, +3 Phil, 259; Wise & Go. ve Heer, 76 Phil. 655) When the law is clear, neither this Court nor the Secretary of ‘inance may, on my ground whatecever, disregard the law or cire evmvent the same, ‘The remedy lies with the legisla-~ ture if 1% could be convinced of the necessity of avending the law. (Silva v. Cabrera, 6 Phil. 392) Moreover, we note that there is no valid and reasonable basis for fixing August 27, 1997 - the date of filing of the request for reconsideration, as the date when the benefits of tax oxoemption should com mence. We Save carefully examined and secrutinined . the records of the case and we found that the condi+ tions end circumstances of the petitioner on Februee ry 7, 1957 - the date of filing the applieations fer tax exemption were the same as on August 27, 1957 < the date fixed by the Secretary of “lsance as the date ef filing of the regqutst for reconsideration. As a matter of fuct, the facts and circumstances sieted in petitioner's request for reconsideration of the deei- sion of the Secretary of ‘inance, disepproving peti- tioner's applications for tax exemption, were slresdy then existing om February 7, 1957, when the original applications for tax exemption were filed with the 405

Decision«~

Case No. 628

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Secretary of Finmanee. Hence, in the case at bar, there is mot even a semblance of a reason for fixing a date other than that fixed by law from which the petitioner will begin to enjoy the benefits of tax exemption under Republic Aet No. 901. | The cases of Commissioner of Internal Revenue vs. Philippine Corn Products, Imc., GR. No. L~13701, May 31, 1960 and Lu Do et al vs. Commissioner of Internal 4 Revenue, C.T.A. Cases Nos. 516 and 692, deeided on August 5, 1960 and September 30, 1960, respectively, cited by respondent in support of his stand are not in point. The only issue in the case at bar as the parties have made it quite clear before us, is not, as in the three previous cases just cited, the discretionary power of the Seecretery of Finance to deter ine what raw mate- rials used in a new industry may be exempted from taxes, but simply the date of effectivity of the tax exemption once approved by the Secretary of Finance. As heretofore stated, the provisions of Sections 4 and 9 of Republic Act No. 901 are quite clear, specifie and determinative on this score.

WHEREFORE, in view of the foregoing considerations, the decision appealed from is hereby reversed, and res- pondent Commissioner of Internal Revenue is ordered to refund to petitioner Silver Swan Menufacturing Company, Inc., the amounts of #10,137.57 and #16,737.39, repre- senting the erroneously or illegally collected advance sales tax antl sales tax, respectively, or the total sum 406 (ot

Decision:~

Manile CTA

Case No. 628 > P] ea 80 ORDERED.

Manila, October 2h, 1962.

Ro costs.

WE CONCURs

Presiding Judge

ROMAN M, UMALI

Associate Judge

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