G.R. No. L-10841; March 24, 1958
Stonehill Steel Corporation, petitioner, vs. Commissioner of Customs, respondent.

FACTS

Petitioner Stonehill Steel Corporation, engaged in manufacturing nails from nail wire as a new and necessary industry, applied for tax exemption under Republic Act No. 35 . Its application was approved by the Secretary of Finance on October 9, 1950, but this exemption did not include customs duties. Consequently, petitioner paid customs duties on its nail wire imports from March 11, 1950, to June 22, 1953, totaling P95,941.57. On June 20, 1953, Republic Act No. 901 was enacted, amending Republic Act No. 35 to exempt new and necessary industries from payment of “all taxes,” including customs duties. On June 30, 1955, the Secretary of Finance issued a certificate of tax exemption to petitioner under Republic Act No. 901 , specifying that the exemption from customs duties was effective June 20, 1953. On October 15, 1953, petitioner requested a refund from the Collector of Customs for the duties paid from March 11, 1950, to June 22, 1953, invoking Section 4 of Republic Act No. 901 , which states that the benefits of exemption shall retroact to the date of filing the application for exemption. The Collector denied the request on October 26, 1953, ruling that Section 4 applied only to industries operating under Republic Act No. 901 , not Republic Act No. 35 . Petitioner did not initially appeal but later sought reconsideration, which was denied. Petitioner then appealed to the Commissioner of Customs, who denied the appeal on September 29, 1955. Petitioner subsequently appealed to the Court of Tax Appeals, which dismissed the appeal on two grounds: (1) failure to comply with procedural requirements under Sections 1370-1373 and 1380 of the Revised Administrative Code regarding protests and appeals of customs assessments, and (2) that the exemption under Republic Act No. 901 applies only to the period after its passage, not retroactively to cover payments made before its enactment.

ISSUE

Whether petitioner is entitled to a refund of customs duties paid before the enactment of Republic Act No. 901 , based on the retroactivity provision in Section 4 of said Act.

RULING

No, petitioner is not entitled to the refund. The Supreme Court modified the resolution of the Court of Tax Appeals, affirming the Commissioner of Customs’ denial of the refund. The Court held that while the procedural dismissal based on non-compliance with Sections 1370-1380 of the Revised Administrative Code was incorrect—as those sections pertain to protests against assessments, not refund claims—the substantive issue was decisive. The exemption under Republic Act No. 901 , including from customs duties, applies only from the date of its enactment, June 20, 1953, and does not retroactively cover duties paid prior to that date. Section 4 of Republic Act No. 901 , which provides for retroactivity to the date of filing the application for exemption, refers specifically to applications filed under Republic Act No. 901 itself, not under the prior Republic Act No. 35 . This interpretation is supported by the certificate of exemption issued by the Secretary of Finance, which explicitly stated the exemption from customs duties was effective June 20, 1953, and by legislative intent as recorded in the Congressional Record, where it was clarified that the retroactive effect would only cover the period after the law’s passage, not before. Therefore, petitioner’s claim for refund of duties paid from March 11, 1950, to June 22, 1953, was properly denied. Costs were imposed on petitioner.