You are on page 1of 1

LUZON STEVEDORING CORPORATION, Petitioner-Appellant, v.

COURT OF TAX
APPEALS and the HONORABLE COMMISSIONER OF INTERNAL REVENUE,
respondents-appellee.

Paras, J.:

Rationale for the Application of Strictissimi Juris

Facts of the Case:
Luzon Stevedoring imported various engine parts and other equipment for the repair and
maintenance of its tugboats. The said parts were assessed with compensating tax, which it paid
under protest. Thereafter, it sought refund from the Commissioner of Internal Revenue. Its claims
for refund was denied by the CIR and was subsequently also denied by the Court of Tax Appeals.
It submitted its petition to the Supreme Court alleging that its “tugboats” are included in the term
“cargo vessels” for tax exemption provide in Section 190 of the National Internal Revenue Code.
Issue:
Whether or not "tugboats" can be interpreted to be included in the term "cargo vessels" for
purposes of the tax exemption provided for in Section 190 of the National Internal Revenue
Code
Held:
NO. "Tugboats" are not "Cargo Vessel". It cannot be claimed that the tugboats in question,
which are for towing and pulling purposes, are neither used in carrying and transporting
passengers nor cargoes as a common carrier by water within the purview of Section 190 of the
Tax Code, as amended by Republic Act No. 3176, for tax exemption.
As the power of taxation is a high prerogative of sovereignty, the relinquishment is never
presumed and any reduction or diminution thereof with respect to its mode or its rate, must be
strictly construed, and the same must be coached in clear and unmistakable terms in order that it
may be applied.