TAXATION 2 | B2015

CASE DIGESTS
SILVER SWAN
MANUFACTURING
COMPANY INC. v.
COMMISSIONER OF
CUSTOMS and CTA
June 29, 1963
Concepcion, J
Luciano, Noel Christian O.
Additional case for Taxpaer!s "e#edies $%%
SUMMARY: During the period covering !rch 5 " Sept #0$
1%5&$ Si'ver S(!n !nu)!cturing i*ported r!( *!teri!'+
)or the u+e in it+ *!nu)!cture o) +o, +!uce- It p!id cu+to*+
dutie+ !nd +peci!' i*port t!.e+ thereon- During the period
in /ue+tion$ +peci0c!'', on Augu+t 2&$ 1%5&$ Si'ver S(!n
(!+ gr!nted e.e*ption )ro* p!,*ent o) t!.e+ 'i*ited to 1
*!teri!'+ to 2e i*ported3 415 Ce''u'o+e 2!nd+$ 425 So,
2e!n+$ 4#5 ono+odiu* G'ut!*!te$ !nd 415 6re+erv!tive+-
Si'ver S(!n then 0'ed (ith the Cu+to*+ ! (ritten re/ue+t
)or re)und o) the +u*+ p!id !+ dutie+ !nd t!.e+- The
Co**i++ioner o) Cu+to*+ denied it+ re/ue+t on the
princip!' ground th!t the good+ covered 4e.cept 1 ite*5
(ere i*ported 67IO7 to the d!te o) the gr!nt o) the
e.e*ption- Si'ver S(!n !ppe!'ed to the CTA- CTA
di+*i++ed on the ground th!t it '!c8+ ! c!u+e o) !ction )or
)!i'ure to e.h!u+t !d*in re*edie+ under the 7evi+ed
Ad*in Code- The SC rever+ed !nd he'd th!t Si'ver S(!n9+
c!+e )or re)und i+ not covered 2, the 7evi+ed Ad*in Code-
DOCTRINE: :ith reg!rd to Section+ 1#&0;1#&# !nd 1#<0
o) the 7AC$ +!id +ection+ !pp!rent', re)er to ! 7=>ING or
DECISION o) ! co''ector o) cu+to*+ (herein 'i!2i'it, )or
cu+to*+ dutie+$ )ee+$ or other *one, ch!rge+ i+
deter*ined$ The p!rt, !dver+e', !?ected 2, +uch ru'ing$
!)ter p!,ing the !*ount o) the !++e++*ent$ *!, *!8e !
prote+t- The Co''ector +h!'' then re;e.!*ine- Shou'd he
overru'e the prote+t !nd +u+t!in hi+ previou+ ru'ing$ the
p!rt, !ggrieved i+ re/uired to !ppe!' +!id ru'ing to the
Co**i++ioner o) Cu+to*+$ (ithin 15 d!,+ !)ter noti0c!tion$
Other(i+e the ru'ing o) the Co''ector 2eco*e+ 0n!' !nd
conc'u+ive-
A)ter e.!*ining the !)orecited +ection+ o) the
Ad*ini+tr!tive Code$ SC !gree+ Si'ver S(!n th!t +!id
+ection re)erring !+ the, do to !++e++*ent+ *!de 2, !
Co''ector o) Cu+to*+ o) cu+to*+ dutie+$ )ee+$ or other
*one, ch!rge+$ c!nnot re)er to ! c!+e o) re)und-
Con+e/uent',$ it (!+ not )or the petitioner to !ppe!' )ro*
the deni!' 2, the Co''ector o) it+ petition )or re)und$ to the
Co**i++ioner o) (ithin 15 d!,+-
The '!( !pp!rent', h!+ not provided )or ! c!+e 'i8e the
pre+ent (herein !n !++e++*ent (!+ v!'id', *!de !nd the
!*ount vo'unt!ri', p!id 2, the i*porter$ !nd n!tur!'',$ no
prote+t (!+ *!de$ 2ut th!t ! '!( p!++ed ,e!r+ '!ter
provided )or +o*e +ort o) e.e*ption )ro* the p!,*ent o)
cu+to*+ dutie+$ !nd invo8ing +!id ne( '!($ the i*porter
(ho h!d previou+', p!id cu+to*+ dutie+ vo'unt!ri', !nd
(ithout prote+t no( !+8+ )or re)und o) +!id dutie+ covered
2, the e.e*ption-
FACTS: Si'ver S(!n !nu)!cturing i+ ! 6hi'ippine
corpor!tion (hich (!+ gr!nted !n e.e*ption in the
*!nu)!cture o) +o, +!uce 2, the Secret!r, o) @in!nce
pur+u!nt to 7A %01 4!*ended 7A #5$ !n !ct !uthoriAing the
e.e*ption o) ne( !nd nece++!r, indu+trie+ )ro* p!,*ent o)
intern!' revenue t!.e+5
Det!i'+ on the gr!nt3
1- Co**enced on Augu+t 2&$ 1%5&
2- >i*ited the *!teri!'+ to 2e i*ported on', to3
!- Ce''u'o+e 2!nd+
2- So, 2e!n+
c- ono+odiu* g'ut!*!te
d- 6re+erv!tive+
TAXATION 2 | B2015
CASE DIGESTS
On the period covering !rch 5 " Septe*2er #0$ 1%5&$
Si'ver S(!n i*ported r!( *!teri!'+ )or the u+e in it+
*!nu)!cture o) +o, +!uce- On thi+ i*port!tion it p!id dutie+
461<$0#5-025 !nd i*port t!.e+ 461B$015-<15- Speci0c!'',$
the+e ite*+ !re3
1- Ite* 1 ; # !nd < !nd 11 " So, 2e!n+
2- Ite* 1 !nd B " Ce''u'o+e B!nd+
#- Ite* 5 " Sodiu* 2enAo!te
1- Ite* & " Ce''oph!ne p!per
5- Ite* % " Cin,' 2!g+
B- Ite* 10 " :hite 2e!n+
On Octo2er 2<$ 1%5<$ Si'ver S(!n 0'ed (ith the Cu+to*+
Co**i++ioner ! (ritten re/ue+t )or re)und o) the +u*+ p!id
!+ cu+to*+ dutie+ !nd +peci!' i*port t!.e+ on it+
i*port!tion on the theor, th!t Secret!r, o) @in!nce h!d no
right to gr!nt ! 'i*ited e.e*ption-
; Thi+ (!+ re)erred to the Secret!r, o) @in!nce
SECRETARY OF FINANCE: In ! 2
nd
Indor+e*ent$ the
Secret!r, di+po+ed !+ )o''o(+3
1- DENIED c'!i*+ o) re)und )or Ite*+ 1 " %
!- The+e (ere i*ported )ro* !rch 2# " Du', 25$
1%5& (hich (!+ 2e)ore the e.e*ption (!+
gr!nted 4Aug 1%5&5
2- DENIED c'!i* o) re)und )or Ite* 10 4(hite 2e!n+5
!- Thi+ i+ not inc'uded in the 'i+t o) r!( *!teri!'+
gr!nted e.e*ption
#- A>>O:ED c'!i*+ )or Ite* 11
CUSTOMS COMMISSIONER3 Att!ching the Indor+e*ent$
the Co**i++ioner +ent ! 'etter to Si'ver S(!n in)or*ing the
'!tter th!t on', Ite* 11 +h!'' 2e re)unded-
Si'ver S(!n then 0'ed ! petition )or revie( 2e)ore the CTA
MOTION TO DISMISS3 The Co**i++ioner o) Cu+to*+ 0'ed
! *otion to di+*i++
1- CTA h!+ no Euri+diction
2- Si'ver S(!n h!+ no c!u+e o) !ction )or )!i'ure to
e.h!u+t !d*in re*edie+
CTA DECISION3 Di+*i++ed the petition$ di+po+ing !+
)o''o(+3
1- On the !''eged '!c8 o) Euri+diction " CTA di+*i++ed
thi+ contention
2- On the !''eged '!c8 o) c!u+e o) !ction " CTA !greed
+ince there (!+ )!i'ure to e.h!u+t !d*in re*edie+
According to the CTA$ the procedure th!t +hou'd h!ve 2een
)o''o(ed i+ +t!ted in Sec- 1#&0;1#&#$ 1#&%;1#<0 o) the
7evi+ed Ad*in Code 4no( Sec- 2#0<;2#1# T!ri? !nd
Cu+to*+ Code5- Thu+$ the i*porter 4or c'!i*!nt o) re)und5
+hou'd co*p', (ith the )o''o(ing procedur!' re*edie+3
A- I*porter or !n, per+on !dver+e', !?ected 2, !n,
ru'ing or deci+ion o) the Co''ector in c!+e+ invo'ving
'i!2i'it, )or duties$ fees$ or other #one char&e
4e.cepting 0.ing o) 0ne+ in +eiAure c!+e+5 #a 'le a
(ritten protest (ith the Collector$
1. :henF
a. At the ti#e (hen pa#ent is #ade$ or
). *ithin 3+ das thereafter
2. But no prote+t +h!'' 2e received or con+idered
un'e++ p!,*ent o) the !*ount c'!i*ed to 2e due
h!+ 0r+t 2een *!de
B- In !n, prote+t!2'e c!+e$ the p!rt, intere+ted
!dver+e', to the Govern*ent i+ re/uired to *!8e
prote+t$ i) he de+ire+ to h!ve the !ction o) the
Co''ector revie(edG
1- Other(i+e +uch !ction +h!'' 2e 0n!' !nd
conc'u+ive$
!- =N>ESS the *!tter 2e correcti2'e )or *!ni)e+t
error in the *!nner pre+cri2ed in Section
1#00 o) the 7evi+ed Ad*ini+tr!tive Code$ no(
Section 1&0& o) the T!ri? H Cu+to*+ Code$
TAXATION 2 | B2015
CASE DIGESTS
C- The prote+t +h!'' indic!te the p!rticu'!r deci+ion or
ru'ing o2Eected to$ the ground on ground+ re'ied
upon$ !nd it+ +cope *u+t 2e 'i*ited to ! sin&le
ad,ust#ent or independent tr!n+!ction-
D- =pon 0'ing o) the proper prote+t in ! prote+t!2'e
c!+e$ the Co''ector +h!'' re;e.!*ine the *!tter !nd
render hi+ deci+ion !ccording',
1- :ithin 0)teen d!,+ !)ter noti0c!tion in (riting 2,
the Co''ector o) hi+ !ction or deci+ion$ the
!ggrieved p!rt, *!, 0'e ! (ritten notice (ith the
Co''ector o) hi+ de+ire to h!ve the c!+e revie(ed
2, the Co**i++ioner
E- :ithin thirt, d!,+ !)ter receipt o) the deci+ion o) the
Co**i++ioner o) Cu+to*+$ the !ggrieved p!rt,$ i) he
+o de+ire+$ *!, 0'e hi+ petition )or revie( (ith CTA
The CTA continue+3
; The pre+ent c!+e i+ ! prote+t!2'e c!+e (ithin the
provi+ion+ o) Section 1#&0 o) 7AC$
It i+ ! civi' *!tter invo'ving the deter*in!tion o)
dutie+$ )ee+$ or *one, ch!rge-
; Io(ever$ Si'ver S(!n did not 0'e ! (ritten prote+t
(ith the Co''ector !t the ti*e o) *!8ing$ p!,*ent or
(ithin #0 d!,+ there!)ter$ +t!ting the p!rticu'!r
portion o) the ru'ing or deci+ion o2Eected$ !nd the
ground or ground+ re'ied upon-
Ie did not +igni), to the Co''ector$ (ithin 0)teen
d!,+ !)ter noti0c!tion o) the !ction or deci+ion$
hi+ de+ire to h!ve the c!+e revie(ed 2, the
Co**i++ioner o) Cu+to*+
; TI=S$ )or )!i'ure to e.h!u+t the !d*ini+tr!tive
re*edie+ provided )or 2, '!(- It i+ proper )or thi+
Court to di+*i++ the !ppe!'
Doctrine o) e.h!u+tion o) !d*ini+tr!tive re*edie+
i+ ! condition sine -ua non 2e)ore one c!n re+ort
to the Court 2ec!u+e it i+ Jindeed ! +ound ru'e )or
it provide+ )or ! po'ic, o) order', procedure (hich
)!vor+ ! pre'i*in!r, !d*ini+tr!tive +i)ting
proce++$ !nd +erve+ to prevent !tte*pt+ to
+(!*p the court+ 2, ! re+ort to the* in the 0r+t
in+t!nceJ
PETITION OF SILVER SWAN BEFORE THE SC3
1- CTA 0nding+ erroneou+ erroneou+
2- The prote+t *entioned in Section 1#&0 7AC cou'd
not po++i2', 2e intended to 2e re/uired (hen the
e.e*ption )ro* t!.!tion did not co*e into e.i+tence
A@TE7 the dutie+ !nd t!.e+ h!d 2een p!id
ARGUMENT OF CUSTOMS: Si'ver S(!n cou'd h!ve *!de
the p!,*ent+ under prote+t$ invo8ing it+ !pp'ic!tion )or
e.e*ption 0'ed on @e2ru!r, &$ 1%5& K or !'*o+t ! *onth
./0O"/ the 0r+t p!,*ent h!d t!8en p'!ce K (ith the
re/ue+t th!t !ction on the prote+t 2e he'd in !2e,!nce unti'
!)ter +!id !pp'ic!tion h!d 2een p!++ed upon
ISSUE3 :ON the CTA erred in di+*i++ing the c!+e )or )!i'ure
to e.h!u+t !d*in re*edie+-
HELD3
I- Stonehi'' Stee' Corpor!tion v+- Co**i++ioner o)
Cu+to*+
A- In thi+ c!+e$ the CTA di+*i++ed the !ppe!' on 2
ground+3
1- 6etitioner )!i'ed to co*p', (ith the provi+ion+
o) Section+ 1#&0;1#&# !nd 1#<0 o) the 7ACG
!nd
2- 7A %01$ petitioner i+ not entit'ed to re)und )or
the re!+on th!t the e.e*ption provided in 7A
%01 re)er+ on', to the period !)ter the p!++!ge
o) +!id Act-
B- :ith reg!rd to Section+ 1#&0;1#&# !nd 1#<0 o)
the 7AC3
TAXATION 2 | B2015
CASE DIGESTS
1- S!id +ection+ !pp!rent', re)er to ! 7=>ING or
DECISION o) ! co''ector o) cu+to*+ (herein
'i!2i'it, )or cu+to*+ dutie+$ )ee+$ or other
*one, ch!rge+ i+ deter*ined$
2- In (hich c!+e$ the p!rt, !dver+e', !?ected 2,
+uch ru'ing$ !)ter p!,ing the !*ount o) the
!++e++*ent$ *!, *!8e ! prote+t
#- The Co''ector +h!'' then re;e.!*ine
1- Shou'd he overru'e the prote+t !nd +u+t!in hi+
previou+ ru'ing3
!- the p!rt, !ggrieved i+ re/uired to !ppe!'
+!id ru'ing to the Co**i++ioner o)
Cu+to*+$ (ithin 15 d!,+ !)ter noti0c!tion$
2- Other(i+e the ru'ing o) the Co''ector
2eco*e+ 0n!' !nd conc'u+ive
II- A)ter e.!*ining the !)orecited +ection+ o) the
Ad*ini+tr!tive Code$ SC !gree+ Si'ver S(!n th!t +!id
+ection re)erring !+ the, do to !++e++*ent+ *!de 2,
! Co''ector o) Cu+to*+ o) cu+to*+ dutie+$ )ee+$ or
other *one, ch!rge+$ c!nnot re)er to ! c!+e o)
re)und
A- Con+e/uent',$ it (!+ not )or the petitioner to
!ppe!' )ro* the deni!' 2, the Co''ector o) it+
petition )or re)und$ to the Co**i++ioner o) (ithin
15 d!,+-
III- It i+ h!rd to i*!gine ! c!+e o) ! petition )or re)und
2eing 0'ed (ith the Co''ector o) Cu+to*+
A- Suppo+ing th!t ! co''ector co**it+ ! *i+t!8e in
the c'!++i0c!tion o) *erch!ndi+e i*ported$ !nd
*!8e+ !n i''eg!' or erroneou+ !++e++*ent3
1- 6!rt, !ggrieved 0'e+ ! prote+t$ 2ut p!,+ the
!*ount !++e++ed on it$ !nd upon con+idering
the prote+t$ the Co''ector re!'iAe+ hi+ *i+t!8e
!nd 0nd+ th!t he h!d co''ected !n !*ount
*ore th!n he +hou'd !nd !*end+ or ch!nge+
hi+ origin!' !++e++*ent-
2- In th!t c!+e$ !'' th!t he h!+ to do i+ to p!, or
return to the !ggrieved p!rt, the e.ce++
!*ount !nd the c!+e i+ 0ni+hed-
B- But +uppo+ing th!t the Co''ector in+i+t+ in hi+
origin!' erroneou+ !++e++*ent !nd the !ggrieved
p!rt, !ppe!'+ hi+ ru'ing to the Co**i++ioner o)
Cu+to*+
1- I) Co**i++ioner$ upon di+covering the
*i+t!8e in the c'!++i0c!tion$ *odi0e+ the
ru'ing o) the Co''ector$ !nd decide+ th!t there
(!+ !n e.ce++ !*ount i''eg!'', co''ected 2,
the Co''ector
2- In th!t c!+e$ hi+ ru'ing or deci+ion (ou'd !'+o
provide )or re)und to the !ggrieved p!rt,$ !nd
the c!+e (i'' then 2e ter*in!ted-
C- But then t(o c!+e+ or e.!*p'e+ !2ove;*entioned
*!, re)er to !++e++*ent+ prote+ted 2, the
!ggrieved p!rt,$ !nd the, !re covered 2,
Section+ 1#&0;1#&# !nd 1#<0-
1- The '!( !pp!rent', h!+ not provided )or !
c!+e 'i8e the pre+ent (herein !n !++e++*ent
(!+ v!'id', *!de !nd the !*ount vo'unt!ri',
p!id 2, the i*porter$ !nd n!tur!'',$ no prote+t
(!+ *!de$ 2ut th!t ! '!( p!++ed ,e!r+ '!ter
provided )or +o*e +ort o) e.e*ption )ro* the
p!,*ent o) cu+to*+ dutie+$ !nd invo8ing +!id
ne( '!($ the i*porter (ho h!d previou+',
p!id cu+to*+ dutie+ vo'unt!ri', !nd (ithout
prote+t no( !+8+ )or re)und o) +!id dutie+
covered 2, the e.e*ption-
2- Thi+ p!rt o) the Cu+to*+ >!( (ou'd !ppe!r to
need c'!ri0c!tion$ !nd the Co**i++ioner o)
Cu+to*+ or the Dep!rt*ent Ie!d *ight
po++i2', c!'' the !ttention o) the >egi+'!ture-
IC- The CTA erred$ there)ore$ in ho'ding th!t petitioner
h!+ no c!u+e o) !ction )or (!nt o) the prote+t
TAXATION 2 | B2015
CASE DIGESTS
provided )or in Section 1#&0 o) the 7evi+ed
Ad*ini+tr!tive Code-
C- Thi+$ not(ith+t!nding$ SC 0nd+ no *erit in the
pre+ent !ppe!'$
A- The certi0c!te o) t!. e.e*ption gr!nted
petitioner herein (!+ +u2Eect to the /u!'i0c!tion
th!t Jthe exe#ption shall co##ence Au&ust 21,
1921
1- O) the !rtic'e+ entit'ed to +!id e.e*ption$
on', tho+e covered 2, the '!+t ite* !*ong
tho+e enu*er!ted !2ove h!d 2een Jc'e!red
)ro* cu+to*+L cu+tod,J !)ter +!id d!te-
B- Si'ver S(!n !++!i'+ the v!'idit, o) the
!)ore*entioned /u!'i0c!tion
A- Si'ver S(!n !rgue+ th!t the Secret!r, o)
@in!nce h!+ no !uthorit, to i*po+e it
1- Section 1 o) 7A %01 provide+3 The 2ene0t+
o) e.e*ption o) ne( !nd nece++!r,
indu+trie+ )ro* the p!,*ent o) !'' t!.e+
under thi+ Act +h!''$ upon the !pprov!' o)
the !pp'ic!tion )or e.e*ption 2, the
Secret!r, o) @in!nce$ retro!ct !+ o) the
d!te o) the 0'ing o) the !pp'ic!tion )or
e.e*ption-
B- It !ppe!r+$ ho(ever$ th!t on @e2ru!r, &$
1%5&$ petitioner !pp'ied )or t!. e.e*ption !+
*!nu)!cturer o) +o, +!uce !nd (orce+ter+hire
+!uce$ (hich (!+ disappro3ed in it+ entiret,-
1- A recon+ider!tion (!+ +ought 2, petitioner
in ! co**unic!tion d!ted Augu+t 2&$
1%5&-
!- Acting thereon$ the Secret!r, o)
@in!nce$ in ! 'etter d!ted Octo2er 15$
1%5&$ gr!nted the re/ue+t )or
e.e*ption Jin re+pect to the
*!nu)!cture o) +o, +!uce on',$J 2ut
not !+ reg!rd+ Jthe *!nu)!cture o)
(orce+ter+hire +!uce - - - !+ the +!*e
7epu2'ic Act No- %01-J
C- It +hou'd 2e noted$ !'+o$ th!t the
recon+ider!tion Jin re+pect to the
*!nu)!cture o) +o, +!uce on',J (!+ gr!nted
in 3ie( of the representations #ade$ not in
the !pp'ic!tion 0'ed on @e2ru!r, &$ 1%5&$ 2ut
in the !)ore*entioned petition )or
recon+ider!tion d!ted Augu+t 2&$ 1%#&-
1- Neither co**unic!tion i+ 2e)ore the SC$
2ut the tenor o) +!id 'etter o) Octo2er 15$
1%5&- indic!te+ th!t there (ere
Jrepre+ent!tion+J or ne( )!ct+ +et )orth in
the !)ore*entioned petition )or
recon+ider!tion o) Augu+t 2&$ 1%5&$ (hich
induced the Secret!r, o) @in!nce to reg!rd
the +!*e !+ the J2!+i+J )or hi+ 0n!'
Jdeci+ionJ !nd !ccording', !+ ! ne(
!pp'ic!tion$ !nd to gr!nt the e.e*ption !+
reg!rd+ Jthe *!nu)!cture o) +o, +!uce
on',J e?ective )ro* the d!te o) +!id
petition )or recon+ider!tion- =nder the
circu*+t!nce+$ (e !re not prep!red to
ho'd th!t the Secret!r, o) @in!nce h!d
vio'!ted +!id Section 1 o) 7epu2'ic Act No-
%01 or other(i+e e.ceeded hi+ !uthorit, in
!cting !+ he did-
DISPOSITIVE: :IE7E@O7E$ (ith the *odi0c!tion !dverted
to !2ove$ reg!rding the !pp'ic!2i'it, o) +ection 1#&0 o) the
7evi+ed Ad*ini+tr!tive Code to the pre+ent c!+e$ the
re+o'ution !ppe!'ed )ro* i+ here2, !Mr*ed$ in !'' other
re+pect+$ (ith co+t+ !g!in+t petitioner !ppe''!nt$ Si'ver S(!n
!nu)!cturing Co*p!n,$ Inc- It i+ +o ordered-