Central Cooperative Exchange v. Honorable Court Of Tax Appeals

MAKALINTAL, J.:

This is a petition for review of the decision of the Court of Tax Appeals dismissing "the claim of petitioner for the refund of the total amount of P1,004,834.11 as erroneous payment of compensating and advance sales taxes on certain articles allegedly imported by it" From the stipulation of facts and the evidence adduced by both parties, it appears that the Central Cooperative Exchange, Inc. (hereinafter referred to as the CCE) is a federated cooperative association organized under the provisions of Act No. 3425, as amended. Its members are farmers' cooperative marketing associations also organized under the aforementioned Act, federations of such cooperatives, and the Agricultural Credit and Cooperative Financing Administration (hereinafter referred to as the ACCFA), a government agency created under Republic Act No. 821, as amended.

On various dates the CCE filed with the Commissioner of Internal Revenue several claims for the refund of compensating and advance sales taxes alleged to have been paid erroneously on certain importations during the period from September 15, 1955 to March 19, 1958. As ground therefor, it invoked the provision of Section 48 of Act No. 3425, as amended, which exempts cooperative marketing associations organized thereunder from the payment of "the merchant's sales tax, the income tax, and all other percentage taxes of whatever nature and description". Without waiting for the result of the administrative action on the aforesaid claims, the CCE filed a petition with the Court of Tax Appeals on May 30, 1958 to compel the respondent Commissioner of Internal Revenue to refund the sum of P789,051.55, representing alleged erroneous payments for compensating and advance sales taxes.

On February 25, 1959 it filed an amended and supplemental petition with a total claim in the sum of P1,004,834.11. On January 25, 1960 while this case was still pending in the court below, the Commissioner of Internal Revenue refunded to the CCE the sum of P190,667.07 but denied the refund of the sum of P50,286.39 covering payments from January 1, 1956 to March 18, 1956 because the claim therefor was filed beyond the prescriptive period provided for in Section 309 of the National Internal Revenue Code. The refund of the sum of P762,872.62 was also denied on the ground that it had been paid by the ACCFA on its importations and said entity was not exempted under the law from the payment of compensating and advance sales taxes.

The following tax items, subject of the claim for refund, were actually litigated in the Court of Tax Appeals, to wit: I. Seedlings (Exh. "B"; Exhs. "7-A"

& "7-B", p. 106, Vol. VI, BIR records) A. 1956 list: Amount Paid Item 4 P2,728.74 Item 5 461.62 Item 6 457.52