COMMISSIONER OF INTERNAL REVENUE vs. TOKYO SHIPPING CO. LTD.
, represented by SORIAMONT
STEAMSHIP AGENCIES INC., and COURT OF TAX APPEALS
(G.R. No. L-68252 May 26, 1995)
FACTS OF THE CASE:
The private respondent foreign corporation engaged in business of cargoes and represented in the Philippines by Soriamont
Steamship Agencies. One of these vessels was the M/V Gardenia.
A company named NASUTRA engaged their services to load more than 16,000 metric tons of sugar in the Philippines.
Meanwhile, the operations manager of the Soriamont paid the income and its common carrier’s tax amounting to more the
Php100,000 based o gross receipts of the vessel. The problem arose when the M/V Gardenia vessel arrived in Guimaras, Iloilo and
subsequently found that there were no sugar to load in the said vessel. Eventually, both agents agreed that the ship sail to Japan
without any cargo.
Here comes the respondent instituted claims for re-payment of income and common carrier's taxes since no receipt was realized,
hence, a tax credit or refund of the sum ONE HUNDRED SEVEN THOUSAND ONE HUNDRED FORTY-TWO PESOS and
SEVENTY-FIVE CENTAVOS (P107,142.75) before petitioner Commissioner of Internal Revenue on March 23, 1981. Failure to
act upon, the respondent instituted an appeal to the Court of Tax Appeals which favored the respondent.
Hence, this petition by the CIR claiming that taxes are presumed to have been collected in accordance with law; that in an action
for refund, the burden of proof is upon the taxpayer to show that taxes are erroneously or illegally collected, and the taxpayer's
failure to sustain said burden is fatal to the action for refund; and that claims for refund are construed strictly against tax claimants.
ISSUES:
Whether the private respondent was able to prove that it derived no receipts from its charter agreement, and hence is entitled to a
refund of the taxes it pre-paid to the government.
HELD:
Yes, based on facts and evidences.
It positively shows that the tramper vessel M/V "Gardenia" arrived in Iloilo on January 10, 1981 but found no raw sugar to load
and returned to Japan without any cargo laden on board. It has the Clearance Vessel to a Foreign Port issued by the District
Collector of Customs, Port of Iloilo and the Certification by the Officer-in-Charge, Export Division of the Bureau of Customs
Iloilo. The correctness of the contents of these documents regularly issued by officials of the Bureau of Customs cannot be doubted
as indeed, they have not been contested by the petitioner. The records also reveal that in the course of the proceedings in the court
a quo, petitioner hedged and hawed when its turn came to present evidence. At one point, its counsel manifested that the BIR
examiner and the appellate division of the BIR have both recommended the approval of private respondent's claim for
refund. The same counsel even represented that the government would withdraw its opposition to the petition after final approval
of private respondents' claim. The case dragged on but petitioner never withdrew its opposition to the petition even if it did not
present evidence at all. The insincerity of petitioner's stance drew the sharp rebuke of respondent court in its Decision and for good
reason. Taxpayers owe honesty to government just as government owes fairness to taxpayers.
The Court of Tax Appeals was affirmed by the Court in toto.
RATIONALE:)
A claim for refund is in the nature of a claim for exemption and should be construed in strictissimi juris against the taxpayer. A
resident foreign corporation engaged in the transport of cargo is liable for taxes depending on the amount of income it derives from
sources within the Philippines. Thus, before such a tax liability can be enforced the taxpayer must be shown to have earned income
sourced from the Philippines (based on section 24 (b) (2) of the National Internal Revenue Code).
The power of taxation is sometimes called also the power to destroy. Therefore it should be exercised with caution to minimize
injury to the proprietary rights of a taxpayer. It must be exercised fairly, equally and uniformly, lest the tax collector kill the
"hen that lays the golden egg." And, in order to maintain the general public's trust and confidence in the Government this power
must be used justly and not treacherously. (Roxas vs. Court of Appeals)
