CENTRAL COOPERATIVE EXCHANGE, INC., PETITIONER, VS. THE HONORABLE COURT OF TAX APPEALS AND THE HONORABLE COMMISSIONER OF INTERNAL REVENUE, RESPONDENTS.

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.
34250 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 bad 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. IV,

BIR records)

A. 1956 list:               Amount Paid

Item 4                   P2,728.74

Item 5                        461.62

Item 6                        457.52  
 

P3,647.38

B. 1957 list:

Item 1                       901.72

Item 2                     1,819,97     

2,721.69

TOTAL amount paid for SEEDLINGS . . . . . . . . . . P6,369.57

II.       
Fertilizer (Exh. “B-2”; Exhs.
“6”

and “6-A”,
p. 1, Vol. IV,

BIR records)

A.     
1957 list:

Items 1 to 12

totaling                      104,965.41

TOTAL AMOUNT PAID for FERTILIZER . . . . . . .104,965.41

III.      
Machinery & Equipment (Exh. “B-1”;

 Exhs. “8-A”, “8-B” and

“8-c”, p. 260, Vol. IV, BIR
records)

A. 1956 list: Item 9    P1,562.16

B.     1957 list:

Items 1 to 10,

inclusive, and

Item 12, totalling
–

P 9,430.18

TOTAL MOUNT PAID for machinery &

Equipment. . . . . . .
.  . . . . . . .. . . . . . P10,992.14

IV.    
Ramie Textiles (Exhs. “B-3-a”

to
“B-3-b”; Exh. “1”

to 5″, pp. 1-5,
Vol.

III, BIR records)

A.     
1956 list:

Items 1 to 45, in-

clusive, totalling        280,560.24

B.1957 list:

Items
1 to 136, in?

clusive totalling         314,438.13

C.    
1958 list:

Items 1 to 40, in?

clusive, totalling        P45 390.00

TOTAL amount paid
for

RAMIE TEXTILES. . . . . .
. . . . . . . . . .P640,388.37

GRAND TOTAL. . . . . . . . . . . 
. . . . . . . . . . 762,715.69

The CCE predicates its claim for refund on the allega­tion that
it was the importer, having paid the corresponding compensating and advance
sales taxes on the importations, al­though the receipts for such payments were
issued in the name
of the ACCFA.^[1] As evidence the CCE presented the correspond­ing cancelled checks, vouchers
and debit memos, the authenticity and identity of which were admitted by both
parties.

In its decision dated February 7, 1964, the Court of Tax Appeals
rejected the allegation of the CCE and found that the ACCFA was the importer of
the articles in question.  Consequently,
it ruled that the CCE was not entitled to the refund claimed.  Having failed to obtain a reconsideration
of the decision, the CCE filed in this Court the instant petition for review.

The decisive issue in this case is: Who was the importer, the CCE or the
ACCFA?  The respondent Court of Tax
Appeals ruled:

“From the evidence on record, we find that ACCFA is the
importer.  The shipping documents, such
as bills of lading and invoices, are clear and satisfactory indications that
ACCFA, not petitioner, is the importer of the goods in question.  The ACCFA’s status as importer is buttressed
by the consideration that the import licenses, letters of credit and tax
receipts are in its name.

“Moreover, the importations of seedlings and ramie textiles
could be undertaken only by the ACCFA as required by law and regulations.

“While the evidence indicates that petitioner paid for the
costs and expenses incidental to the importations, or the payments there­of
were debited to its accounts, the same does not make petitioner the
importer.”

The CCE excepts from the ruling and contends that it is contrary
to the decisions of this Court, particularly in the case of Tan Tiong Bio, et
al. vs. Commissioner of Internal Revenue, G. R. L-15778, April 28, 1962.

The contention of the CCE is without basis.  In the case cited, it was held that the
Central Syndicate, not Dee Hong Lue, was the importer of the surplus goods
because in the contract of sale between Dee Hong Lue and the Foreign
Liquidation Commission, the former acted as agent of the group of financiers
who later became the principal stock­holders of the Central Syndicate.  The finding of the Court of Tax Appeals
therein, which was sustained by this Court, is that “Dee Hong Lue purchased the surplus goods in question not
for himself but for the Central Syndicate which was then in the process of
incorporation.” In the
instant case, there is no evidence that the ACCFA acted as a mere agent of the
CCE in the importation of the goods on which the taxes were assessed and
paid.  The fact that “the evidence
indicates that petitioner paid for the cost of and expenses incidental to the
importations, or the payments thereof were debited to its account,” does
not necessarily show that the ACCFA was acting as agent of the CCE in
connection with said importations. 
Neither does it militate against the ACCFA’s being itself the
importer.  If anything, it would merely
indicate that the CCE paid in advance part of the price of the articles pur­chased
by it from the ACCFA, and that the latter, in paying the taxes, as importer,
for which receipts were issued in its name, used the money received from the
CCE for said purchases.

This Court made an observation in the case cited that “even
if Dee Hong Lue may be deemed as the purchaser of the surplus goods in his own
right, nevertheless the corporation still may be regarded as the importer of
the same goods for the reason that Dee Hong Lue transferred to it all his rights
and interests in the contract with the Foreign Liquidation Commission, and it
was said corporation that took delivery thereof from the place where they were stored in Leyte x x x.”
Even in the light of the said observation
the CCE cannot claim to be the importer here. 
It is not disputed that the ACCFA was the consignee of the articles in
question as shown by the bills of lading. As pointed out by the Solicitor General,there is
no evidence nor is it stipulated that the bills of lading were ever endorsed by
the ACCFA
in favor of the CCE; the ACCFA was the owner of the goods while the same were in the customs area.
Evidently, when the customs brokers withdrew the goods from customs custody,
they acted as agents of the ACCFA and not of the CCE, because the Collector of Customs
would not make delivery of the goods to anybody else than the ACCFA, who by the terms of the bills of lading appeared to be the con­signee.

It is further urged by
the CCE that this Court go “beyond
the subterfuge of documents” and ascertain who was the real party to the
transaction. The claim of the CCE that it was such party, just because the cost
of and other expenses incidental to the importations were borne by it, cannot
prevail aver the conclusion arrived by the Court of Tax Appeals on the basis of the following facts and circums­tances:

(1)  
Under
the regulations of the Department of Agriculture and Natural Resources
only the ACCFA could import seedlings, and
under Republic Act No. 1392, as
implemented by Executive Order No. 129 (Sept. 23, 1955), ramie textiles
could only be imported by the same entity.

(2)   The
ACCFA applied with the Central Bank for licenses to import the articles in
question and for the corresponding dollar allocations. The import licenses were
issued in its name.

(3)  
The
letters of credit to cover the cost of importations were likewise in the name
of the ACCFA.

(4)  
The shipping documents, such as bills of lading
and invoices, were all in the name of the ACCFA, which thus appeared to be the
consignee of the goods.

(5)  
The taxes were all paid in the name of the ACCFA, as shown by the
tax receipts.

(6)  
There being no evidence that the bills of lading
were endorsed
in favor of the CCE, it is evident that the customs brokers who withdrew the
goods from the customs area acted in behalf of the ACCFA.

Besides, in the case of the importations of ramie textiles,
the ACCFA actually paid all the costs and expenses, including taxes, although
the payments appeared to have been debited against the accounts of the CCE.

Wherefore, the decision of the Court of Tax Appeals in
C.T.A. Case No. 537, dated February 7, 1964, is hereby affirmed, with costs against
petitioner.

Concepcion, C.J., Reyes, Dizon, Zaldivar, Sanchez, Castro,
Fernando, Capistrano, Teehankee, and
Barredo, JJ., concur.

^[1]
It is not denied that the ACCFA did not enjoy the tax exemptions granted to the
CCE under Act No. 3425.  Neither did the
ACCFA make a claim for refund.