P.M.P. Navigation Company v. Meer
REITERATIONFacts
The Antecedents: Plaintiff-appellant, P. M. P. Navigation Company, paid under protest P3,484.00 as compensating tax on an army launch salvaged by it, two LCT vessels, one Chevrolet truck purchased from the Foreign Liquidation Commission, and one jeep purchased from the United States Commercial Company, all in 1946. Procedural History: The Court of First Instance of Manila absolved the defendant Collector of Internal Revenue from the complaint. The Petition: The plaintiff appealed the decision, seeking a refund of the compensating tax paid.
Issue(s)
Whether the plaintiff-appellant is entitled to a refund of the compensating tax paid on the salvaged army launch and the three vessels. Whether the plaintiff-appellant, in purchasing the Chevrolet truck and the jeep within the Philippines from instrumentalities of the United States Government, was an importer within the meaning of Section 190 of Commonwealth Act No. 466.
Ruling
The appealed judgment is affirmed with respect to the tax paid on the Chevrolet truck and the jeep, but reversed with respect to the three vessels. The defendant-appellee is ordered to refund to the plaintiff-appellant the tax paid on said vessels.
Ratio Decidendi
On the tax paid on the three vessels: The plaintiff-appellant is entitled to a refund of the compensating tax paid on the three vessels. This is in view of Republic Act No. 361, which took effect on June 9, 1946. This Act exempts from the compensating tax vessels, their equipment and/or appurtenances purchased or received from without the Philippines on or before the effectivity of the said Act. Since the vessels were purchased in 1946, prior to the effectivity of Republic Act No. 361, they fall under the exemption provided by law. Therefore, the tax paid on these vessels was erroneously collected. On the tax paid on the Chevrolet truck and the jeep: The plaintiff-appellant, in purchasing the Chevrolet truck from the Foreign Liquidation Commission and the jeep from the United States Commercial Company within the Philippines, is considered an importer within the meaning of Section 190 of Commonwealth Act No. 466. The Court reaffirmed its ruling in Go Cheng Tee vs. Meer, which held that the term 'importation' should be understood in the sense employed by the law, not its ordinary meaning. The importation is not deemed terminated until the corresponding tax is paid. Even though the United States Army brought the effects into the Philippines for military purposes and was not obligated to pay taxes, the moment these effects were transferred to the plaintiff for commercial purposes, the right of the government to tax them arose. The plaintiff, by engaging in commerce with these items, became the importer under the precise terms of the law. This doctrine was further supported by the case of Saura Import & Export Co., Inc. vs. Meer, which emphasized that goods brought into the Philippines by the United States Government for its use were, in contemplation of law, on foreign soil until brought outside of those bases or depots, at which point importation in the ordinary sense occurred.
Main Doctrine
Vessels salvaged by a company are exempt from compensating tax if purchased before the effectivity of Republic Act No. 361. However, vehicles purchased within the Philippines from instrumentalities of the United States Government are subject to compensating tax, as the purchaser is considered an importer under Section 190 of Commonwealth Act No. 466.