Procter & Gamble Philippine Manufacturing Corp. v. Commissioner of Customs

[CA-G.R. SP No. 24495. May 7, 1991.] (C.T.A. Case No. 2788) PROCTER & GAMBLE PHILIPPINES MANUFACTURING CORPORATION , petitioner , vs . COMMISSIONER OF CUSTOMS and the HONORABLE COURT OF TAX APPEALS , respondents . D E C I S I O N LUNA , J p : This is a petition for review filed with the Supreme Court by Procter & Gamble Philippine Manufacturing Corporation against the Court of Tax Appeals and the Commissioner of Customs (G.R. No. 56806). The case was considered "submitted for decision", and "REFERRED AND TRANSFERRED" to this Court on March 13, 1991. The "Statement of the Case" embodied in the petition, are as follows: "1.1. In April 1975, petitioner imported from Japan for its manufacturing activities a shipment of five thousand (5,000) bags of Soda Ash Dense (200 metric tons) which was landed in the Port of Manila and duly declared under Entry No. 33511, series of 1975. "1.2. Petitioner's importation, per the Consular Invoice of Merchandise and the Supplier's Invoice covering the same, had a valuation of US$37,606.16 or US$188.0308 per metric ton (FOB Japan). Accordingly, petitioner paid to the Bureau of Customs the total sum of P59,753.00 as customs duties and advance sales taxes on said shipment. "1.3. Before final liquidation, however, the Bureau of Customs reappraised petitioner's shipment and, applying the Bureau's RVIC No. 4-438 dated 14 April 1975, assessed said shipment at US$61,400.00 for the entire shipment. Petitioner was thus required by the Bureau of Customs to pay additional customs duties of P18,453.00 and advance sales taxes of P16,228.00, or a total of P34,680.00. Under protest, the petitioner paid said sum to the Bureau of Customs on 21 April 1975. "1.4. On 23 April 1975, petitioner formally protested the payment of additional customs duties and advance sales taxes on its importation with the collector of Customs in a case docketed as Manila Customs Protest Case No. 9659. The Collector of Customs, however, in a decision dated 20 July 1975, dismissed petitioner's protest for lack of merit. "1.5. Petitioner then seasonably appealed the Collector's decision to the respondent Commissioner of Customs. In a decision dated March 1976, however, the respondent Commissioner of Customs affirmed in full the Collector's decision, denying petitioner's claim for refund of the additional customs duties and advance sales taxes in the total amount of P34,680.00. "1.6. On 12 April 1976, therefore, petitioner, within the reglementary period, filed a "Petition for Review" against the respondent Commissioner of Customs with the respondent CTA entitled "Procter & Gamble Philippine Manufacturing Corporation vs. Commissioner of Customs" which was docketed as CTA Case No. 2788 praying that said respondent Commissioner of customs be ordered to refund to petitioner the amount of P34,680.00 representing overpaid customs duties and advance sales taxes which it paid under protest. A copy of said "Petition" is attached hereto and made an integral part hereof as Annex "A". "1.7. On or about 19 May 1976, the respondent Commissioner of Customs filed his "Answer" to petitioners' "Petition". A copy of said "Answer" is attached hereto and made an integral part hereof as Annex "B". "1.8. On 29 July 1976, petitioner filed its "Reply" to the "Answer" filed by respondent Commissioner of Customs. A copy of said "Reply" is attached hereto and made an integral part hereof as Annex "C". "1.9. After due trial, petitioner submitted its "Memorandum" a copy of which is attached hereto and made an integral part hereof as Annex "D". "1.10. Since respondent Commissioner of Customs failed to file his memorandum within the time granted by the respondent CTA, said respondent considered the case as submitted as of 19 January 1981. "1.11. On 2 April 1981, petitioner received a copy of the "Decision" dated 27 February 1981 rendered by the respondent CTA. A certified true copy of said "Decision" is attached hereto and made an integral part hereof as Annex "E". "1.12. In said "Decision", the respondent CTA sustained the position of the petitioner that the proper valuation of its shipment for the purpose of computing the customs duties and advance sales taxes due thereon should be the value or price shown in the Consular Invoice of Merchandise and the Suppliers Invoice of US$37,606.16 or US$188,0308 per metric ton. Respondent CTA held, however, that only the overpaid customs duties of P18,453.00, but not the overpaid advance sales taxes of P16,228.00, were refundable to the petitioner. "1.13. Respondent CTA reasoned that: ". . . with regard to the claim for refund of internal revenue taxes (advance sales taxes) in the amount of P16,228.00 (Exh. 'C', pp. 68-69, CTA records), the same can not be passed upon by the Court in view of the fact that nothing in the records show that petitioner had filed its written claim for refund thereof with the Commissioner of Internal Revenue and that the latter was made a party to this case. Without satisfying these jurisdictional requirements, which in the instant case are lacking, the same is fatal to the claim of petitioner for the refund of the overpaid internal revenue tax on the importation in question . . ." ("December", p. 15) "1.14. On 30 April 1981, petitioner seasonably filed its "Notice of Appeal" with the Court of Tax Appeals, a copy of which is attached hereto and made an integral part hereof as Annex "F"." Petitioners contend that respondent court erred in not granting its claim for refund of overpaid advance sales taxes on its importations. Section 1708 of RA 1937, otherwise known as the "Revised Tariff and Customs Code", as amended on November 26, 1972 by PD 34, is titled: "Claim for Refund of Duties and Taxes and Mode of Payment". This section reads: "All claims for refund of duties shall be made in writing, and forwarded to the Collector to whom such duties are paid, who upon receipt of such claim, shall verify the same by the records of his Office, and if found to be correct and in accordance with law, shall certify the same to the Commissioner with his recommendation together with all necessary papers and documents. Upon receipt by the Commissioner of such certified claim he shall cause the same to be paid if found correct. "If as a result of the refund of customs duties there would necessarily result a corresponding refund of internal revenue taxes on the same importation, the Collector shall likewise cause the said excess taxes to be paid, refunded, or tax credited in favor of the importer, with advice to the Commissioner of Internal Revenue". The respondent court did not pass on the claim for refund of the overpaid advance sales tax, because petitioner has filed no "written claim for refund . . . with the Commissioner of Internal Revenue (who was not) made a party to the case", and, therefore, concluded that "without satisfying these jurisdictional requirements . . . (it) is fatal to the claim . . ." for refund. The respondent court, in construing paragraph 2 of Section 1708, supra, should have read, relate and consult said paragraph with section 6 of the National Internal Revenue Code of 1977, which provides that "for the collection of the national internal revenue on imported articles, the Commissioner of Customs and his subordinates . . . are constituted (as) agents of the Commissioner of Internal Revenue". Those words/phrases "constituted as agents of the Commissioner of Internal Revenue" are meaningful. The word "agents", or simply "agent", ordinarily means a person empowered to act for another, or one who acts or is empowered to act for another, the like of a representative of a government agency, or a deputy of a public official to whom certain authority has been delegated by his superior. Gregorio Araneta, Inc. vs. Paterno, 91 Phil., 804, says that an agent is one who accepts another's representation to perform in his name certain acts of more or less transcendency. In brief, an agent is a person who performs an action or brings about a certain result, for and in behalf of another. Thus, since by express mandate of Section 6 of the National Internal Revenue Code, the "Commissioner of Customs and his subordinates", are constituted as "agents" of the "Commissioner of Internal Revenue in the collection of the national internal revenue on imported articles," the Commissioner of customs and his subordinates should be deemed as forming a necessary part and component of the Bureau of Internal Revenue and act for and in behalf of the Commissioner of Internal Revenue insofar as the collection of national internal revenue on imported articles. The written claim for refund of the overpaid advance sales tax on the importations, addressed to and filed with the Collector and/or Commissioner of Customs should be deemed sufficient/substantial compliance with the law as if it were addressed to, and received by, the Commissioner of Internal Revenue, as required in Section 306 of the Tax Code, governing "Recovery of tax erroneously or illegally collected", in relation to section 309, paragraph 3, last sentence of the same Code, providing that ". . . No credit or refund of taxes or penalties shall be allowed unless the tax payer files in writing with the Commissioner, a claim for credit or refund . . . ." In this issue, another written claim for refund addressed to the Commissioner of Internal Revenue would be a surplusage, time-wasting, productive of red tape, and resulting in needless delay in getting routine business done. The petition for Review filed with the respondent court impleading the Commissioner of Customs, without additionally impleading the commissioner of Internal Revenue, is deemed sufficient. Since the Commissioner of Customs is expressly constituted by statute as the agent of the Commissioner of Internal Revenue, the former can be sued without need of joining the latter in accordance with section 3, Rule 3, Revised Rules of Court. At any rate, the Commissioner of Internal Revenue may have no more cause for complaint, as the Supreme Court, cognizant of the fact that the Commissioner of Internal Revenue was not so impleaded before the Tax Court, in a resolution dated June 26, 1981, directed that a copy of the petition for review be served upon him, and the Legal Counsel of the Bureau of Internal Revenue, in collaboration with the Solicitor General, were directed to file a MEMORANDUM on the legal issues involved. In compliance therewith, the Commissioner of Internal Revenue filed his memorandum. We therefore find and so hold that the respondent court should not have confined its decision dated February 27, 1981 by ordering respondent Commissioner of Customs to refund to petitioner "the amount of P18,453.00" which "represents the "refund of internal revenue taxes", in accordance with the second paragraph of Section 1708, supra , directing that the Commissioner of Customs ". . . shall cause the said excess taxes to be . . . refunded, or tax credited in favor of the importer . . .". All that the law additionally requires the Commissioner of Customs to do is to ". . . advice the Commissioner of Internal Revenue." Some such actions are also within the appellate jurisdiction of the Tax Court to review by appeal the decisions of the Collector of Internal Revenue involving "refunds of internal revenue taxes" (sec. 7-(1), RA 1125), in relation to the decisions of the Commissioner of Customs involving ". . . other matters arising under the Customs Law or other law or part of law administered by the Customs" (sec. 7-(2), id .) Thus, Gonzales vs. Province of Iloilo , 38 SCRA 209, a case involving the correctness and validity of assessment as well as collection of realty taxes, held that if the Court of Tax Appeals rules that the imposition is not correct, and a refund is in order, it is within its jurisdiction to order the refund of the taxes paid its jurisdiction to order the refund of the taxes paid by the tax payers, because "the special jurisdiction of the tax court over the correctness and validity of the assessment would unavoidably include with it all incidental matters connected thereto, more specifically, the refund of the taxes paid by them, if they were to be upheld in their appeal" (38 SCRA 221-222). WHEREFORE, that portion of the decision appealed from is hereby REVERSED and SET ASIDE, and another one is entered, ordering the respondent Commissioner of customs to refund to petitioner Procter & Gamble Philippine Manufacturing Corporation the amount of P16,228.00, representing the overpaid advance sales taxes, and directing the said respondent to cause/make the advance to the Commissioner of Internal Revenue. SO ORDERED. Camilon and Magsino, JJ ., concur.