Republic, et al. vs. Commissioner of Twtersal Reveror and Commissioner Gf Customs Respondents. Reewener Ere Nmweeuewne—S = W» Ractern Shipfing Limes, et al.

DECISION

TRASSOGCEAN TRAGSPORT

CORPORATION, retitioner, | versus tain |

COMMISSIONER OF INTERSAL

REVENUE and COMMISSIONER

GF CUSTOMS, Respondents, The petitioners have appesled from the decisions of respondent Commissioner of Internal Revenve holding them Liable for the payment of compensating tux on vessels sequired from the Reparations Comaission.

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DECISIGH -

CTA CASES Wos, 970, 975, 989 & 990 2 In CTA Caze No. 975, C & 4 Construction Soe, Ince, sequired from the Separations Comsis- sion under a temporary contract for utilisation nine (9) vessels: the "“antla Hey", "Ste. Cecilie", “Marites Asuncion", "Digne Corazon", “Cacan I*, "Cecon Ii", "Cacon Ili", “Cason IV", and "G & A", for the price of #2,690,000.00 om which the eam penssting tax of #2%0,97%.00 was assessed. The purchase price is peyable in ten equel yearly installments at 3% interest per annum, with the first tneteallment peyable two years efter delivery of the versels to petitioner. Until the whole purchase price is paid, title to the vessels is retained by the Neperetions Commission.

In CTA Cone Sos 975, Rastern Shipping Lines, Inc. acquired from the Reparations Commission under a contreet of conditional purchese and sale the cosan-going veesel M/% "Sastern Comet” for the price of *3,555,792.08 on which the conpenseting tex of F249,936.00 was assessed. ‘The purchase price is pagable in ten equal yearly installments of 375,162.93 with interest at 3% per enoum, begin- ning August 31, 1962. Title to the vessel is retained by the Reparations Commiasion until the whole purchase price is paid.

In CTA Cage Se. 989, the sane petitioner Rastern Shinning Liner. Ine. aeoutired from the 282

DECISION -

CTA CASES 80S

97°, 975, 989" & 990 3 Reparations Comission under a contract for utilization the ocean-going vessel B/V “faat- ern Galaxy" for °6,496,3°5.88 on which the com- pensating tax of 462,190.00 was assessed. The purehase price is also payable in ten equal year- iy installments at 3° interest per saonum, with the first instellment payeble two years efter delivery of the vessel to petitioner. Until the whole purchese price is peid, title to the vessel 4s also retained by the Separations Commission, In CTA Case No. 990, Transocean Transport Corporation acquired from the Reparations Commis-~ sion under a contract of conditional purchase end sale the ccean-coing vessel “/V “Transecean Mere chant” for °6,498,468.88 on which the compensa~ ting tax of P503,551.00 was assessed. The purchase price ig payable in ten equal yearly installments of P685,636.%%, with interest at 35 per annus, beginning August 31, 1963. “igdlerly, until the whole purchase price is paid, title te the vessel is retained by the Reparations Commission, In all these cases, petitioners contested the volidity of the aseessnents but respondent Commissioner of Internal Revenue refused to reeon- sider them. Accordingly, respondent Comsaissioner of Customs refused to release end deliver the vessels to petitioners without the compensating 283

DECISION

CTA CASES HOS, » tax being first paid. “ence, petitioners have appealed, At the same time, petitioners asked that the vessels be delivered to them without pre- payment ef the compensating tax upon the filing of adequate bonds te secure payment ef the tax in case they are finally held lifeble therefor. in separate resolutions of different dates, this Court issued writs of preliminary injunction against re- spendents and ordered the release of said vessels upon the filing of surety bonds to guarant<e pay- ment of the amounts assessed against petitioners.

While the cases were pending trial, Sepublic Act No. 3079 was enseted amending Republic Act %o. 1789. Under the latter statute, buyers of goods acquired from the Reperations Commisaion are exempt from the compensating tax. ‘Section 20 thereof provides thet any private party or ené- user who had previously sequired reparations goods may apply for the renovation ef his utilisation contreet with the Commission in order to avail of any provision of the amendatory Act whieh fe favor- able to him under the new lew. Accordingly, peti- tioners herein applied for the renovation of their utilization contraets with the Neperations Com mission which were granted, Then they fileé their respeetive supplemental petitions, 284

DECISION «

CTA Case® NOS, 979, 975, 989 & 990 5 Subsequent to the filing of respondents‘ answers to the supplemental petitions, this Court, upon motion of the perties, postponed the hearing of these cases to enable the parties to submit a stipulation of facts.

Thereafter, the parties, in « joint sanifes- tation end stipuletion, egreed to hold in abeyance the proceedings in these cases until such time as the Supreme Court shall have decided the case of Commissioner of Intercal tevenue and Consissioner ef Customs ve Hotelho Shipping Corporation and ; General Shipping Co., Ince, Gel. los. L~2163}-j4, “4 which involve the same facts and insue, and to : abide Ay the decision in enid esses. :

it appeere thet the said case of Comaissioner of internal Nevenue and Commissioner of Customs v. Betelhe Shipping Corperetion ané General Shipping Cosy Ine, Gelle Hon. 12163334 nae already been finally decided by the Supreme Court in « decision promulgated June 29, 1967, wherein it was heid | that vessels sequired from the Reparations Com- a mission prior to the approval of Nepublic Act so, 3079 are also exeapt from the coupensating tax if the purchasers applied for renovation of their utilisation contrects ond assumed the new obliga- tions imposed upon seld purchasers under the sew lew. ‘Seid the Supreme Court - \ ao Met ty Wee e? age Ee we We eee) a ate bee eae ee ee TT WaT vy i i 1 ek da a, | ee _ =F ee a eB Pe 1, ~~ . . - i e = 7 f ad ‘ sd ' ae, E . F . : -—— | pecisz04 « 4 OTA CASRS NOS. cM 970, 975, 989 & 990 - 6 3079 does not explicitly declare that those whe purchased reparstions goods | prior to June 17, 1961, are exempt 5 from the compensati tox. Tt does | not say 80, se they do pot real- ly enjoy evch exemption they comply with the pr te Tee of se ; unbyic ;

: | Tt is true that Bepublie Act No.

applicant. in other words, it is manifest, from the language of said section 20, that the same intended to ve such rs the opportunity to treated “in lile manner and to the same extent as an end-user filing his application sfter the approval this Amendatory Act.” Like ‘most- ' favored~nation-cleuse" in international : PS pe omemppend the aforementioned section ; ‘ thus seeks, pot to ¢iseriminete or "a to create ao exemption or exception, . but to aboligh the discrimination, exemption or exception that would ) otherwise result, in favor of the end- user who bought after June 17, 1961 and | against one who bought prior thereto, ' Indeed, it is difficult te find a Act which is more fevorable” to the ;

Se* 2

substantial tification for the distinetion between the one and the other. As correctly held by the Tax ie a Court in Philippine Ace Lines, inc, ‘ TG. Be he Noss 906 and S64, Jemusry » . and anuery 4 25 1963), and reiterated in the cases | "x x x In providit thet the faesauths epoviaten of Republic Act io. 3079 shell be available to ap- cante for renovation of heir utilization contracts, ; on condition that said a es plicants shell volunteri assume all the new oblige- tions provided in the new Pe.

law, the luw intends to place " Eicne goods before’ the’ eneel- ae

DECISION -

CASES BOS, 970, 97S_ 989 & 990 f ment of the amendetory Act of. on the seme foot efter its enactment.

, crantes a that ee oe an 4 on onee an ap- 4 plication for renovation of ‘. a utilization contract hes a who

a Aet

the applicant ‘in like man-~ ner and to the same extent, as an end-user 4 . rg oy after the es ov- of tris smendatory 5 exemption from com- - pin tax te one whose us or penned od acquisition reparations -<naguallan open he new lew, ie to the ea . oo that they aaaite cea express mandate privileges sene ogee Fm gg It would be sanifest distortion of the literal seaning and yarpose of the new lew.* Roth parties manifested their willingness ¥ to abide by the decision of the Suprese Court in F seid cases of Botelho Shipping Corperation and = General Shipping Co., Inc.

WESREFORE, the aceessments for compensating taxes aguinst petitioners in the above-entitled cases should be, as they are hereby, set aside, 287 os those his eg i chee Oh

DECISION -

CTs Cactus OB, 970, 975, 989 © 9996 § 4 ;

and the surety bonds filed by petitioners are 5 4 hereby cancelled. Without pronouncement as to 33 costs. ‘ nh Quezon City, August 19, 1967. . Presiding Judge ,

WK CONCURs 4

Leo 4

fiBiAO Rs Re 5

Associete Judge °

~ a RAMOR &. AVANGERA

Associate Judge