Commissioner of Internal Revenue v. Court of Tax Appeals

FIRST DIVISION [CA-G.R. SP No. 27349. March 26, 1996.] (C.T.A. Case No. 4477 ) COMMISSIONER OF INTERNAL REVENUE , petitioner , vs . HON. COURT OF TAX APPEALS and ZIPPY COMMERCIAL CORP. , respondent . D E C I S I O N ABAD SANTOS , JR . , J p : This is a petition for review seeking to set aside the decision of the respondent Court of Tax Appeals in CTA Case No. 4477 dated August 20, 1991 granting the claim for refund of private respondent in the amount of P900,000.00 representing allegedly an erroneously paid ad valorem tax and the Resolution dated February 7, 1992 denying petitioner's motion for reconsideration. The antecedental facts germane to the issue raised in this petition are as follows: Private respondent Zippy Commercial Corporation (ZIPPY for brevity) is a registered domestic corporation engaged in the businesses of buying locally-manufactured cigarettes with foreign brands from local manufacturers for export to foreign buyers. On September 10, 1987, ZIPPY was issued a permit by petitioner Commissioner of Internal Revenue (CIR for brevity) to purchase from local cigarette manufacturers quantities of cigarettes for export without prepayment of specific tax. On the basis of said permit, ZIPPY purchased 450 cases of Marlboro King Cigarettes from the La Suerte Cigar and Cigarettes Factory for the amount of P1,800,000.0 inclusive of the ad valorem tax in the amount of P900,000.00 and value-added tax in the amount of P163,636.36. These 450 cases of Marlboro King Cigarettes were actually exported by ZIPPY to Green Dragon Trading Co. of Hongkong which generated foreign exchange payment in the amount of $65,925.00. Consequently, in a letter dated December 21, 1988, ZIPPY filed a claim for refund of the ad valorem tax in the amount of P900,000.00. Similarly, in a letter dated April 3, 1989, ZIPPY filed a claim for refund of value-added tax in the amount of P163,636.36. In a letter-decision dated May 22, 1990, CIR denied the claim for refund of the ad valorem tax in the amount of P900,000.00. Similarly, in a letter dated January 25, 1990, CIR denied ZIPPY's claim for refund of the value-added tax. Finding the decisions of the CIR contained in the aforesaid letters unacceptable, ZIPPY appealed to the Court of Tax Appeals. The case for the refund of the value-added tax and the case for the refund of the ad valorem tax docketed as CTA Case No. 4476 and 4477, respectively, were consolidated and entitled "Zippy Commercial Corporation vs. Commissioner of Internal Revenue." On August 20, 1991, the Court of Tax Appeals rendered a decision in favor of ZIPPY, the dispositive portion of which reads, "WHEREFORE, the respondent should and is hereby ordered to refund or credit to petitioner, a) the amount of P163,636.36 paid as value-added tax in CTA Case No. 4476 and P163,636.36 also paid as value-added tax in C.T.A. Case No. 4476. b) the amount of P900,000.00 paid as ad valorem taxing CTA Case No. 4477 SO ORDERED." 1 Not satisfied with the foregoing decision of the Court of Tax Appeals, CIR filed the instant petition raising the sole issue WHETHER OR NOT ZIPPY COMMERCIAL IS ENTITLED TO REFUND OF THE AMOUNT OF NINE HUNDRED THOUSAND PESOS (P900,000.00) ALLEGED AS ERRONEOUSLY PAID AD VALOREM TAX for resolution. The case hinges on the construction of the provision of Section 127 (d) of the National Internal Revenue Code, pertinent part of which reads, "Section 127. Payment of excise taxes on domestic products . xxx xxx xxx d) Credit for excise tax on goods actually exported . When goods locally produced or manufactured are removed and actually exported without returning to the Philippines, whether so exported in their original state or as ingredients or parts of any manufactured goods or products, any excise tax paid thereon shall be credited or refunded upon submission of the proof of actual exportation upon receipt of the corresponding foreign exchange payment ; Provided, that the excise tax on mineral products, except coal and coke, imposed under Section 151, shall not be creditable or refundable even if the mineral products, are actually exported." CIR contends that the exemption from excise tax contemplated by the aforequoted provision refers to exporters who are manufacturers/producers themselves of the goods exported and since ZIPPY is a trader-exporter, the said tax privilege does not apply to it. ZIPPY, on the other hand, asseverates that Section 127 (d) makes no mention that it only applies to manufacturers or producers. The Court of Tax Appeals upheld the theory of ZIPPY and held that " the more correct way of interpretation will be that the incentive will be extended to every exporter subject only to the conditions aforementioned ." We are substantially in agreement with the foregoing conclusion of the Court of Tax Appeals. Indeed, a casual reading of the provision of Section 127 (d) of the National Internal Revenue Code will readily show that the law does not qualify nor restrict the exporters to only the manufacturers or producers of the said goods. Nowhere was there an explicit mention that only manufacturers/producers who are exporters themselves can avail of the tax privilege granted under the said provision of law. What is clearly fleshed out in said provision is that for locally produced or manufactured goods to be entitled to credit or refund of excise tax, the following requirements should be present, to wit 1) said goods are exported either in their original state or as ingredients or part of any manufactured goods or products; 2) the exporter should submit proof exportation, and 3) the exporter should likewise submit proof of receipt of the corresponding foreign exchange payment. It is understood, therefrom, that the tax privilege applies to every exporter provided the conditions therein set forth are complied with. That ZIPPY has complied with the aforementioned requirements is not disputed at all by petitioner CIR. Even in their petition, CIR admitted that ZIPPY purchased from La Suerte Cigar and Cigarettes Factory 450 cases of Marlboro Kings Cigarettes, a locally manufactured good, for export to Hongkong; that actual exportation of the said good was made on November 30, 1988 to Green Dragon Trading Co. in Hongkong; and that the corresponding foreign exchange payment in the amount of Sixty-Five Thousand Nine Hundred Twenty-Five ($65,925.00) Dollars was received through Solidbank. 2 Having met all the requirements for entitlement to a credit or refund for excise tax, We believe that CIR cannot thwart ZIPPY's right to ask for a refund on the excise tax it thus paid by the mere expedience of giving a different construction to an otherwise clear and unambiguous provision of law. Accordingly, since the provisions of the law involved in the instant case are clear and unambiguous, they should be given their plain meaning. Inasmuch as the law does not make any distinction, it is not for Us to make any also. 3 WHEREFORE, finding no reversible error in the decision of the Court of Tax Appeals, the same is AFFIRMED. The petition for review is hereby DISMISSED for want of merit. SO ORDERED. De Pano, Jr . and Vidallon-Magtolis, JJ . , concur. Footnotes 1. CTA Decision, pp. 18-19; pp. 40-41, Rollo. 2. p. 5 of Petition; p. 13, Rollo. 3. see Allarde v. Commission on Audit, 218 SCRA 227.