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[ G.R. No. 135804. February 10, 1999]

COMMISSIONER OF INTERNAL REVENUE et al. vs. THOMAS TAYENGCO, et al.

FIRST DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated FEB 10, 1999.

G.R. No. 135804 (Commissioner of Internal Revenue and Commissioner of Customs vs. Thomas Tayengco and Erlinda Tayengco.)

Petitioners assail the decision of the Court of Appeals sustaining that of the Court of Tax Appeal classifying private respondents' single cab 1989 Chevy Blazer as a truck, hence not subject to ad valorem tax and consequently ordering petitioners to refund the amount of P405,619.47 paid by private respondents.

Private respondents spouses are "balikbayans" from the USA who brought home the subject car with a 5,700 cc engine displacement. Upon joint inspection of the subject vehicle conducted by the Bureau of Internal Revenue, the Bureau of Customs, the Bureau of Import Services of the Department of Trade and Industry and the Land Transportation Office, the vehicle was classified as an automobile. Respondents wrote the Bureau of Internal Revenue seeking legal opinion while advancing proof and arguing that the subject vehicle is a truck.

Private respondents paid under protest the custom duties, VAT, and excise taxes in the sum of P539,427.00. and thereafter wrote the Bureau of Internal Revenue for a refund of the ad valorem tax in the amount of P371,818.00.

Not having been acted upon and with the 2-year prescriptive period provided under Section 230 of the National Internal Revenue Code nearing expiration, respondents appealed the case to the Court of Tax Appeals which decided in their favor.

Upon elevation, the Court of Appeals affirmed on the basis of BIR Memorandum No. EO-90-000-00-377-93 dated September 20, 1993 which provides:

xxx thus, the same vehicle would be subject to ad valorem tax at the compromise rate indicated under said Finance Department Order IF THE YEAR MODEL IS FROM 1988 TO 1992 and the ENGINE DISPLACEMENT is between 2,000 cc to 4,500 cc. (p. 25, Rollo)

The Court of Appeals held that both abovementioned requisites must concur, that is, if the motor vehicle is not of a make within the years specified or if its engine displacement is outside the specified range, then it is not subject to ad valorem tax.

Thus, the instant petition.

The main issue involves the interpretation of Executive Order 90-000-00377-93.

As correctly ruled by both the Court of Tax Appeals and the Court of Appeals the use of the conjunctive word "and" clearly indicates the intent of the law for both requisites to be present. Otherwise the conjunctive word or should have been used.

Although the subject vehicle is vintage 1989, it is with an engine displacement of 5,700 cc, perforce outside the coverage.

WHEREFORE, petition is denied due course.

Very truly yours,

(Sgd.) VIRGINIA ANCHETA-SORIANO

Clerk of Court


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