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TAX CASES SET 1

Pilipinas Shell Petrolium Corp v. CIR
G.R. No. 172598; December 21, 2007

Facts: In 1988, BIR sent a collection letter to Petitioner Pilipinas Shell Petroleum Corporation (PSPC) for
alleged deficiency excise tax liabilities of PhP 1,705,028,008.06 for the taxable years 1992 and 1994 to 1997,
inclusive of delinquency surcharges and interest. As basis for the collection letter, the BIR alleged that PSPC
is not a qualified transferee of the TCCs it acquired from other BOI-registered companies. These alleged
excise tax deficiencies covered by the collection letter were already paid by PSPC with TCCs acquired
through, and issued and duly authorized by the Center, and duly covered by Tax Debit Memoranda (TDM) of
both the Center and BIR, with the latter also issuing the corresponding Accept Payment for Excise Taxes
(APETs).

PSPC protested the collection letter, but it was denied. Because of respondent inaction on a motion for
reconsideration PSPC filed a petition for review before the CTA.

In 1999, the CTA ruled that the use by PSPC of the TCCs was legal and valid, and that respondent’s attempt
to collect alleged delinquent taxes and penalties from PSPC without an assessment constitutes denial of due
process. Respondent elevated CTA Decision to the Court of Appeals (CA) through a petition for review.

Despite the pendency of this case, PSPC received assessment letter from respondent for excise tax
deficiencies, surcharges, and interest based on the first batch of cancelled TCCs and TDM covering PSPC’s
use of the TCCs. All these cancelled TDM and TCCs were also part of the subject matter of the now pending
before the CA.

PSPC protested the assessment letter, but the protest was denied by the BIR, constraining it to file another
case before the CTA. Subsequently, CTA ruled in favor of PSPC and accordingly cancelled and set aside the
assessment issued by the respondent. Respondent motion for reconsideration of the above decision which
was rejected thus respondent appealed the above decision before the CTA En Banc.

The CTA En Banc ruled in favor of respondent and ordered PSPC to pay the amount of P570,577,401.61 as
deficiency excise tax for the taxable years 1992 and 1994 to 1997, inclusive of 25% surcharge and 20%
interest.
Issue: Whether or not petitioner is liable for the assessment of deficiency excise tax after the validly issued
TCCs were subsequently cancelled for having been issued fraudulently

Held: No. Petitioner is not liable for the assessment of deficiency excise tax.

In the instant case, with due application, approval, and acceptance of the payment by PSPC of the subject
TCCs for its then outstanding excise tax liabilities in 1992 and 1994 to 1997, the subject TCCs have been
canceled as the money value of the tax credits these represented have been used up. Therefore, the DOF
through the Center may not now cancel the subject TCCs as these have already been canceled and used up
after their acceptance as payment for PSPC’s excise tax liabilities. What has been used up, debited, and
canceled cannot anymore be declared to be void, ineffective, and canceled anew.

Besides, it is indubitable that with the issuance of the corresponding TDM, not only is the TCC canceled
when fully utilized, but the payment is also final subject only to a post-audit on computational errors. Under
RR 5-2000, a TDM is a certification, duly issued by the Commissioner or his duly authorized representative,
reduced in a BIR Accountable Form in accordance with the prescribed formalities, acknowledging that the
taxpayer named therein has duly paid his internal revenue tax liability in the form of and through the use of a
Tax Credit Certificate, duly issued and existing in accordance with the provisions of these Regulations.
The Tax Debit Memo shall serve as the official receipt from the BIR evidencing a taxpayer’s payment or
satisfaction of his tax obligation. The amount shown therein shall be charged against and deducted from the
credit balance of the aforesaid Tax Credit Certificate.

Thus, with the due issuance of TDM by the Center and TDM by the BIR, the payments made by PSPC with
the use of the subject TCCs have been effected and consummated as the TDMs serve as the official receipts
evidencing PSPC’s payment or satisfaction of its tax obligation. Moreover, the BIR not only issued the

corresponding TDM, but it also issued ATAPETs which doubly show the payment of the subject excise taxes
of PSPC.

Based on the above discussion, we hold that respondent erroneously and without factual and legal basis
levied the assessment. Consequently, the CTA En Banc erred in sustaining respondent’s assessment.

SECOND DIVISION

[G.R. No. 118043. July 23, 1998]

LINCOLN PHILIPPINE LIFE INSURANCE COMPANY, INC. (now JARDINE-CMG LIFE
INSURANCE CO. INC.), petitioner, vs. COURT OF APPEALS and COMMISSIONER OF
INTERNAL REVENUE, respondents.

DECISION
MENDOZA, J.:

This is a petition for review on certiorari of the decision rendered on November 18, 1994 by the Court
of Appeals[1] reversing, in part, the decision of the Court of Tax Appeals in C.T.A. Case No. 4583.
The facts are not in dispute.[2] Petitioner, now the Jardine-CMG Life Insurance Company, Inc., is a
domestic corporation engaged in the life insurance business. In 1984, it issued 50,000 shares of stock as
stock dividends, with a par value of P100 or a total of P5 million. Petitioner paid documentary stamp taxes
on each certificate on the basis of its par value. The question in this case is whether in determining the
amount to be paid as documentary stamp tax, it is the par value of the certificates of stock or the book value
of the shares which should be considered. The pertinent provision of law, as it stood at the time of the
questioned transaction, reads as follows:

SEC. 224. Stamp tax on original issues of certificates of stock. -- On every original issue, whether on
organization, reorganization or for any lawful purpose, of certificates of stock by any association, company
or corporation, there shall be collected a documentary stamp tax of one peso and ten centavos on each two
hundred pesos, or fractional part thereof, of the par value of such certificates: Provided, That in the case of
the original issue of stock without par value the amount of the documentary stamp tax herein prescribed shall
be based upon the actual consideration received by the association, company, or corporation for the issuance
of such stock, and in the case of stock dividends on the actual value represented by each share.[3]

The Commissioner of Internal Revenue took the view that the book value of the shares, amounting
to P19,307,500.00, should be used as basis for determining the amount of the documentary stamp
tax. Accordingly, respondent Internal Revenue Commissioner issued a deficiency documentary stamp tax
assessment in the amount of P78,991.25 in excess of the par value of the stock dividends.
Together with another documentary stamp tax assessment which it also questioned, petitioner appealed
the Commissioners ruling to the Court of Tax Appeals. On March 30, 1993, the CTA rendered its decision
holding that the amount of the documentary stamp tax should be based on the par value stated on each
certificate of stock.The dispositive portion of its decision reads:

WHEREFORE, the deficiency documentary stamp tax assessments in the amount of P464,898.76
and P78,991.25 or a total of P543,890.01 are hereby cancelled for lack of merit. Respondent Commissioner
of Internal Revenue is ordered to desist from collecting said deficiency documentary stamp taxes for the
same are considered withdrawn.

SO ORDERED.

In turn, respondent Commissioner of Internal Revenue appealed to the Court of Appeals which, on
November 18, 1994, reversed the CTAs decision and held that, in assessing the tax in question, the basis
should be the actual value represented by the subject shares on the assumption that stock dividends, being a

distinct class of shares, are not subject to the qualification in the law as to the type of certificate of stock used
(with or without par value). The appellate court, therefore, ordered:

IN VIEW OF ALL THE FOREGOING, the decision appealed from is hereby REVERSED with respect to
the deficiency tax assessment on the stock dividends, but AFFIRMED with regards to the assessment on the
Insurance Policies. Consequently, private respondent is ordered to pay the petitioner herein the sum
of P78,991.25, representing documentary stamp tax on the stock dividends it issued. No costs
pronouncement.

SO ORDERED.

Hence, this petition with the following assignment of error:

RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT STOCK DIVIDENDS
INVOLVING SHARES WITH PAR VALUE ARE SUBJECT TO DOCUMENTARY STAMP TAX
BASED ON THE BOOK VALUE OF SAID SHARES WHICH RULING IS CONTRARY TO WHAT
IS CLEARLY PROVIDED FOR BY SECTION 224 (NOW SECTION 175) OF THE TAX CODE.

The petition has merit.
First. In ruling that the book value of the shares should be considered in assessing the documentary
stamp tax, the Court of Appeals stated:

There are three (3) classes of stocks referred to in Section 224 (now 175) of the Internal Revenue Code:
(a) Certificate of Stocks with par value, (b) Certificate of Stock with no par value and (c) stock
dividends. The first two (2) mentioned are original issuances of the corporation, association or company
while the third ones are taken by the corporation, association or company out of or from their unissued shares
of stock, hence are also originals. Undoubtedly, all the three classifications are subject to the documentary
stamp tax.

Conformably, in the case of stock certificates with par value, the documentary stamp tax is based on the par
value of the stock; for stock certificates without par value, the same tax is computed from the actual
consideration received by the corporation, association or company; but for stock dividends, documentary
stamp tax is to be paid on the actual value represented by each share.

Since in dividends, no consideration is technically received by the corporation, petitioner is correct in basing
the assessment on the book value thereof rejecting the principles enunciated in Commissioner of Internal
Revenue vs. Heald Lumber Co. (10 SCRA 372) as the said case refers to purchases of no-par certificates of
stocks and not to stock dividends.[4]

Apparently, the Court of Appeals treats stock dividends as distinct from ordinary shares of stock for
purposes of the then 224 of the National Internal Revenue Code. There is, however, no basis for considering
stock dividends as a distinct class from ordinary shares of stock since under this provision only certificates of
stock are required to be distinguished (into either one with par value or one without) rather than the classes
of shares themselves.
Indeed, a reading of the then 224 of the NIRC as quoted earlier, starting from its heading, will show that
the documentary stamp tax is not levied upon the shares of stock per se but rather on the privilege of issuing
certificates of stock.
A stock certificate is merely evidence of a share of stock and not the share itself. This distinction is clear
in the Corporation Code, to wit:

SEC. 63. Certificate of stock and transfer of shares. - The capital stock of stock corporations shall be divided
into shares for which certificates signed by the president or vice-president, countersigned by the secretary or
assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with the by-
laws. Shares of stock so issued are personal property and may be transferred by delivery of the certificate or
certificates indorsed by the owner or his attorney-in-fact or other person legally authorized to make the
transfer. No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in
the books of the corporation so as to show the names of the parties to the transaction, the date of the transfer,
the number of the certificate or certificates and the number of shares transferred.

No shares of stock against which the corporation holds any unpaid claim shall be transferable in the books of
the corporation.[5]

Stock dividends are in the nature of shares of stock, the consideration for which is the amount of
unrestricted retained earnings converted into equity in the corporations books.[6] Thus,

A stock dividend is any dividend payable in shares of stock of the corporation declaring or authorizing such
dividend. It is, what the term itself implies, a distribution of the shares of stock of the corporation among the
stockholders as dividends. A stock dividend of a corporation is a dividend paid in shares of stock instead of
cash, and is properly payable only out of surplus profits. So, a stock dividend is actually two things: (1) a
dividend and (2) the enforced use of the dividend money to purchase additional shares of stock at par...[7]

From the foregoing, it is clear that stock dividends are shares of stock and not certificates of stock which
merely represent them. There is, therefore, no reason for determining the actual value of such dividends for
purposes of the documentary stamp tax if the certificates representing them indicate a par value.
The Solicitor General himself says that, based on the then 224, there are only two bases for determining
the amount of the documentary stamp tax:

An examination of the structure of the main provision of Sec. [224] of the NIRC will show that it intends to
classify the tax bases into two, either the par value, or the actual consideration or actual value. It specifies in
the first part that the basis for the imposition of the documentary stamp tax on shares of stocks belonging to
the first category, discussed in the early part of this comment, shall be the face value. In contradistinction, the
provision specifies in the proviso that for the second and third categories, the basis for the tax shall not be the
face value. Rather, the basis is either the actual consideration received by the corporation for the share or the
actual value of the share.[8]

Apparently, the former tax code sought to distinguish between stock dividends without par value and
other transactions involving ordinary shares of stock without par value in the second clause of the then 224
in order to prevent claims that the former are exempt from documentary stamp taxes as, unlike in the case of
ordinary shares, corporations actually receive nothing from their stockholders in exchange for such stock
dividends. Hence the provision that, in the case of stock dividends, the amount of the documentary stamp tax
must be based on the actual value of each share. This is the only purpose for the distinction in the second
clause of the subject provision.
Second. It is error for the Solicitor General to contend that, under the then 224 of the NIRC, the basis for
assessment is the actual value of the business transaction that is the source of the original issuance
of stock certificates.[9] To the contrary, the documentary stamp tax here is not levied upon the specific
transaction which gives rise to such original issuance but on the privilege of issuing certificates of stock. As
we have held in several cases:

A documentary stamp tax is in the nature of an excise tax. It is not imposed upon the business transacted but
is an excise upon the privilege, opportunity or facility offered at exchanges for the transaction of the
business. It is an excise upon the facilities used in the transaction of the business separate and apart from
the business itself. (Du Pont v. U.S., 300 U.S. 150; Thomas v. U.S., 192 U.S., 363; Nicol v. Ames, 173 U.S.
509). With respect to stock certificates, it is levied upon the privilege of issuing them;not on the money or
property received by the issuing company for such certificates. Neither is it imposed upon the share of stock.
As Justice Learned Hand pointed out in one case, documentary stamp tax is levied on the document and not
on the property which it described. (Empire Trust co. v. Hoey, 103 F 2d. 430). . . .[10]

Third. Settled is the rule that, in case of doubt, tax laws must be construed strictly against the State and
liberally in favor of the taxpayer. This is because taxes, as burdens which must be endured by the taxpayer,
should not be presumed to go beyond what the law expressly and clearly declares.[11] That such strict
construction is necessary in this case is evidenced by the change in the subject provision as presently
worded, which now expressly levies the said tax on shares of stock as against the privilege of issuing
certificates of stock as formerly provided:

SEC. 175. Stamp Tax on Original Issue of Shares of Stock. - On every original issue, whether on
organization, reorganization or for any lawful purpose, of shares of stockby any association, company or
corporation, there shall be collected a documentary stamp tax of Two pesos (P2.00) on each Two hundred

pesos (P200), or fractional part thereof, of the par value, of such shares of stock: Provided, That in the case
of the original issue of shares of stock without par value the amount of the documentary stamp tax herein
prescribed shall be based upon the actual consideration for the issuance of such shares of stock: Provided,
further, That in the case of stock dividends, on the actual value represented by each share.[12]

WHEREFORE, the decision of the Court of Appeals is REVERSED insofar as the deficiency tax
assessment on stock dividends is concerned and the decision of the Court of Tax Appeals is reinstated.
SO ORDERED.

EN BANC

[G.R. No. 117359. July 23, 1998]

DAVAO GULF LUMBER CORPORATION, petitioner, vs. COMMISSIONER OF INTERNAL
REVENUE and COURT OF APPEALS,respondents.

DECISION
PANGANIBAN, J.:

Because taxes are the lifeblood of the nation, statutes that allow exemptions are construed strictly
against the grantee and liberally in favor of the government. Otherwise stated, any exemption from the
payment of a tax must be clearly stated in the language of the law; it cannot be merely implied therefrom.

Statement of the Case

This principium is applied by the Court in resolving this petition for review under Rule 45 of the Rules
of Court, assailing the Decision[1] of Respondent Court of Appeals[2] in CA-GR SP No. 34581 dated
September 26, 1994, which affirmed the June 21, 1994 Decision[3] of the Court of Tax Appeals[4] in CTA Case
No. 3574. The dispositive portion of the CTA Decision affirmed by Respondent Court reads:

WHEREFORE, judgment is hereby rendered ordering the respondent to refund to the petitioner the amount
of P2,923.15 representing the partial refund of specific taxes paid on manufactured oils and fuels.[5]

The Antecedent Facts

The facts are undisputed.[6] Petitioner is a licensed forest concessionaire possessing a Timber License
Agreement granted by the Ministry of Natural Resources (now Department of Environment and Natural
Resources). From July 1, 1980 to January 31, 1982 petitioner purchased, from various oil companies, refined
and manufactured mineral oils as well as motor and diesel fuels, which it used exclusively for the
exploitation and operation of its forest concession. Said oil companies paid the specific taxes imposed, under
Sections 153 and 156[7] of the 1977 National Internal Revenue Code (NIRC), on the sale of said products.
Being included in the purchase price of the oil products, the specific taxes paid by the oil companies were
eventually passed on to the user, the petitioner in this case.
On December 13, 1982, petitioner filed before Respondent Commissioner of Internal Revenue (CIR) a
claim for refund in the amount of P120,825.11, representing25% of the specific taxes actually paid on the
above-mentioned fuels and oils that were used by petitioner in its operations as forest concessionaire. The
claim was based on Insular Lumber Co. vs. Court of Tax Appeals[8] and Section 5 of RA 1435 which reads:

Section 5. The proceeds of the additional tax on manufactured oils shall accrue to the road and bridge funds
of the political subdivision for whose benefit the tax is collected: Provided, however, That whenever any oils

the president of the Philippine Wood Products Association. 1982. 1981) had prescribed. but it computed the refund based on rates deemed paid under RA 1435. 1435 are not the operative provisions to be applied but rather. in support of its claim for refund. The respondent Court of Tax Appeals failed to apply the Supreme Courts Decision in Insular Lumber Co. In its decision.A. It is an unquestioned fact that petitioner complied with the procedure for refund. 1994.A. including the submission of proof of the actual use of the aforementioned oils in its forest concession as required by the above-quoted law. 1980 and from February 1. v. and on manufactured oils other than lubricating oils (from July 1. To rule that the basis for computation of the refunded taxes should be Sections 1 and 2 of R. The respondent Court of Tax Appeals ignored the increase in rates imposed by succeeding amendatory laws. the CTA granted the claim. submitted to the CIR the affidavits of its general manager. 1981). this petition for review. 1980 to June 30. 1983. Petitioner. As noted earlier. Sections 1 and 2 of R. Insisting that the basis for computing the refund should be the increased rates prescribed by Sections 153 and 156 of the NIRC. On June 21. That no new road shall be constructed unless the routes or location thereof shall have been approved by the Commissioner of Public Highways after a determination that such road can be made part of an integral and articulated route in the Philippine Highway System. the respondent Court of Tax Appeals ruled contrary to established tenets of law when it lent itself to interpreting Section 5 of R. Rio Tuba Nickel Mining Corporation [11] and our subsequent Resolution dated June 15.[10] The Court of Appeals held that the claim for refund should indeed be computed on the basis of the amounts deemed paid under Sections 1 and 2 of RA 1435. Sections 153 and 156 of the National Internal Revenue Code. Respondent Court further ruled that the claims for refund which prescribed and those which were not filed at the administrative level must be excluded.[9] Public Respondents Ruling In its petition before the Court of Appeals. and not on the higher rates actually paid by petitioner under the NIRC. V. it cited our pronouncement in Commissioner of Internal Revenue v. In regard to the other purchases.mentioned above are used by miners or forest concessionaires in their operations. under which the petitioner paid the specific taxes on manufactured and diesel fuels. the Court of Appeals affirmed the CTA Decision. inequitable and oppressive. 1980 to January 19. The Issue . arbitrary. III. all attesting that the said manufactured diesel and fuel oils were actually used in the exploitation and operation of its forest concession.923. amending section one hundred forty-two of the Internal Revenue Code: Provided. petitioner elevated the matter to the Court of Appeals. 1435 rather than Section 153 and 156 of the National Internal Revenue Code is unfair. petitioner filed at the CTA a petition for review docketed as CTA Case No. Hence. and three disinterested persons. On January 20. Disallowed on the ground that they were not included in the original claim filed before the CIR were the claims for refund on purchases of manufactured oils from January 1. 1982 to June 30.15. In so ruling. the CTA rendered its decision finding petitioner entitled to a partial refund of specific taxes the latter had paid in the reduced amount of P2. 1435. 3574. 1992 clarifying the said Decision. The CTA ruled that the claim on purchases of lubricating oil (from July 1. without qualification or limitation. erroneous. when the construction of said law is not necessary. twenty-five per centum of the specific tax paid thereon shall be refunded by the Collector of Internal Revenue upon submission of proof of actual use of oils and under similar conditions enumerated in subparagraphs one and two of section one hereof. II. further. petitioner raised the following arguments: I. Court of Tax Appeals which granted the claim for partial refund of specific taxes paid by the claimant. as amended. IV. as required in section twenty-six of the Philippine Highway Act of 1953. 1980 to January 4.A.

notwithstanding the different rate of exemption. If the limitation of the period of refund of specific taxes paid on oils used in aviation and agriculture is intended to cover similar taxes paid on oil used by miners and forest concessionaires. is clear and unambiguous enough to require construction or qualification thereof.[18] . on the other hand. Hence. The specific taxes collected on gasoline and fuel accrue to the Fund. Petitioner argues that the refund should be based on the increased rates of specific taxes which it actually paid. petitioner raises one critical issue: Whether or not petitioner is entitled under Republic Act No. 5 of RA 1435 At the outset. they do not directly benefit from the Fund and its use. specifically the phrase twenty-five per centum of the specific tax paid thereon shall be refunded by the Collector of Internal Revenue. it is entitled to claim the refund under Section 5 of RA 1435. 1982 and submitted the required proof that these were actually used in operating its forest concession. the tax refund gives the mining and the logging companies a measure of relief in light of their peculiar situation. it claims a refund based on the increased rates under Sections 153 and 156 of the NIRC. The Courts Ruling The petition is not meritorious.[15] Petitioner argues that the statutory grant of the refund privilege.[12] In the main. In other words. Public respondent. and their vehicles seldom use the national highways. 1435. Court of Tax Appeals:[17] x x x Section 5 [of RA 1435] makes reference to subparagraphs 1 and 2 of Section 1 only for the purpose of prescribing the procedure for refund.[16] In addition. there would have been no need of dealing with oil used by miners and forest concessions separately and Section 5 would very well have been included in Section 1 of Republic Act No. 156 of the 1977 (Sec.[13] When the Highway Special Fund was abolished in 1985. Petitioner then reasons that the express mention of Section 1 of RA 1435 in Section 5 cannot be expanded to include a limitation on the tax rates to be applied x x x [otherwise. 145 of the 1939) National Internal Revenue Code. which is to be used for the construction and maintenance of the highway system. Tax Refund Strictly Construed Against the Grantee Petitioner submits that it is entitled to the refund of 25 percent of the specific taxes it had actually paid for the petroleum products used in its operations. This express reference cannot be expanded in scope to include the limitation of the period of refund. contends that it should be based on specific taxes deemed paid under Sections 1 and 2 of RA 1435. the reason for the refund likewise ceased to exist. 1435 to the refund of 25% of the amount of specific taxes it actually paid on various refined and manufactured mineral oils and other oil products taxed under Sec. it must be stressed that petitioner is entitled to a partial refund under Section 5 of RA 1435.[14] Since petitioner purchased the subject manufactured diesel and fuel oils from July 1. In its Memorandum. 1980 to January 31. Petitioner Entitled to Refund Under Sec. The rationale for this grant of partial refund of specific taxes paid on purchases of manufactured diesel and fuel oils rests on the character of the Highway Special Fund. it cites our pronouncement in Insular Lumber vs. which was enacted to provide means for increasing the Highway Special Fund. 153 and Sec. the question before us pertains only to the computation of the tax refund. But because the gasoline and fuel purchased by mining and lumber concessionaires are used within their own compounds and roads. as prescribed in Sections 153 and 156 of the NIRC. 142 and Sec.] Section 5 should very well have been included in Section 1 x x x.

a sworn certificate satisfactory to the Collector proving that the said oils were actually used in aviation: Provided. Specific tax on manufactured oils and other fuels. further. unless shown to the contrary. there shall be collected. eight centavos. as amended. The relevant statutory provisions do not clearly support petitioners claim for refund. as required in section twenty-six of the Philippine Highway Act of 1953. one centavo: Provided. per liter of volume capacity. the removal of denatured alcohol of not less than one hundred eighty degrees proof (ninety per centum absolute alcohol) shall be deemed to have been removed for motive power. That whenever any oils mentioned above are used by miners or forest concessionaires in their operations. only the alcohol content shall be subject to the tax herein prescribed. Section one hundred and forty-two of the National Internal Revenue Code. (c) Naptha. twenty-five per centum of the specific tax paid thereon shall be refunded by the Collector of Internal Revenue upon submission of proof of actual use of oils and under similar conditions enumerated in subparagraphs one and two of section one hereof. duly registered with the Securities and Exchange Commission. gasoline. (3) In the case of aviation oils. per liter of volume capacity. is further amended to read as follows: SEC. per metric ton. fifty per centumof the specific tax paid thereon shall be refunded by the Collector of Internal Revenue upon the submission of the following: (1) A sworn affidavit of the producer and two disinterested persons proving that the said oils were actually used in agriculture. xxxxxxxxx Section 5. is further amended to read as follows: SEC. seven centavos. 142. and all other similar products of distillation.On fuel oil. SEC. the specific tax on which has already been paid. -. commercially known as diesel fuel oil. attesting to the fact that the oils were actually used in agriculture.On refined and manufactured mineral oils and motor fuels. amending section one hundred forty-two of the Internal Revenue Code: Provided. per liter of volume capacity. -. Whenever any of the oils mentioned above are. That no such refunds shall be granted in respect to the oils used in aviation by citizens and corporations of foreign countries which do not grant equivalent refunds or exemptions in respect to similar oils used in aviation by citizens and corporations of the Philippines. two and one-half centavos. per liter of volume capacity. The proceeds of the additional tax on manufactured oils shall accrue to the road and bridge funds of the political subdivision for whose benefit the tax is collected: Provided. (b) Lubricating oils. and (d) On denatured alcohol to be used for motive power. For the purpose of this subsection. one peso. Section one hundred and forty-five of the National Internal Revenue Code. having more or less the same generating power. or in lieu thereof (2) Should the producer belong to any producers association or federation. The Court is not persuaded. RA 1435 provides: SECTION 1. 2. nineteen hundred and fifty two. the affidavit of the president of the association or federation. Specific Tax on Diesel fuel oil. however. there shall be collected the following taxes: (a) Kerosene or petroleum. That no new road shall be constructed unless the route or location thereof shall have been approved by the Commissioner of Public Highways after a determination that such road can be made part of an integral and articulated route in the Philippine Highway System. . during the five years from June eighteen. and on all similar fuel oils. That if the denatured alcohol is mixed with gasoline. used in agriculture and aviation. as amended. 145.

the removal of denatured alcohol of not less than one hundred eighty degrees proof (ninety per centum absolute alcohol) shall be deemed to have been removed for motive power. per liter of volume capacity. Sections 153 and 156 provided as follows: SEC.On fuel oil. per liter of volume capacity. Specific tax on manufactured oils and other fuels. For the purposes of this subsection. 153. only the alcohol content shall be subject to the tax herein prescribed. liquefied petroleum gas used for motive power shall be taxed at the equivalent rate as the specific tax on diesel fuel oil. -. unless otherwise provided for by special laws. 1981. per liter of volume capacity. one centavo: Provided. No. That. eight centavos. -. per liter of volume capacity. PD 1672 and EO 672 amended the first two provisions. Specific tax on manufactured oils and other fuels. (b) Lubricating oils. That. there shall be collected the following taxes which shall attach to the articles hereunder enumerated as soon as they are in existence as such: (a) Kerosene. eighty centavos. if the denatured alcohol is mixed with gasoline. seventeen and one-half centavos. (j) Aviation turbo jet fuel. renumbering them and prescribing higher rates. the specific tax on which has already been paid. (d) On denatured alcohol to be used for motive power.) xxxxxxxxx SEC. respectively. per liter of volume capacity. the tax shall be one peso and ten centavos and one peso. waxes and petrolatum. per kilogram." Then on March 21. That. per liter of volume capacity. these provisions were amended by EO 672 to read: SEC. (i) Greases. gasoline and all other similar products of distillation. From February 8. 1980 to January 31. and on all similar fuel oils.D. fifty-five centavos. gasoline and all other similar products of distillation. . commercially known as diesel fuel oil. 1. seven centavos. 1982 under the following statutory provisions. per liter of volume capacity. 1981. per liter of volume capacity. one peso and six centavos: Provided. (c) Naphtha. which tax shall attach to this fuel oil as soon as it is in existence as such. (c) Naphtha. -. P. per kilogram. having more or less the same generating power. fourteen centavos: Provided. ninety-one centavos: Provided. (h) Asphalts. Accordingly. the 1977 NIRC. fifty-seven centavos. per liter of volume capacity. (e) Processed gas. (b) Lubricating oils. (f) Thinners and solvents. on premium and aviation gasoline. That on premium and aviation gasoline. 1672. Specific tax on diesel fuel oil. fifty centavos. 153. Subsequently. per liter of volume capacity. the tax shall be one peso per liter of volume capacity. per liter of volume capacity. (g) Liquefied petroleum gas.On refined and manufactured mineral oils and motor fuels.On refined and manufactured mineral oils and motor fuels. 1980 to March 20. 156. (As amended by Sec. three centavos. petitioner paid specific taxes on petroleum products purchased from July 1. unless shown to the contrary. per liter of volume capacity. there shall be collected the following taxes which shall attach to the articles hereunder enumerated as soon as they are in existence as such: (a) Kerosene. eighty centavos. per kilogram. nine centavos.

When the law itself does not explicitly provide that a refund under RA 1435 may be based on higher rates which were nonexistent at the time of its enactment. xxxxxxxxx SEC. having more or less the same generating power. per liter of volume capacity. (f) Thinners and solvents.[22] The issue is not really novel. The mere fact that the privilege of refund was included in Section 5. not Sections 153 and 156 of the NIRC of 1977. [19] on the other hand. The specific taxes on oils which Rio Tuba paid for the aforesaid period were no longer based on the rates specified by Sections 1 and 2 of R. A legislative lacuna cannot be filled by judicial fiat. (g) Liquefied petroleum gas.On fuel oil. twelve centavos. commercially known as diesel fuel oil. 1435 but on the increased rates mandated under Sections 153 and 156 of the National Internal Revenue Code of 1977. Hence. -. three centavos. [21] it must be construed strictissimi juris against the grantee. the specific tax on which has already been paid. waxes and petrolatum. sixty-four centavos. one centavo. twenty-one centavos: Provided. Rio Tuba Nickel and Mining Corporation: Our Resolution of 25 March 1992 modifying our 30 September 1991 Decision in the Rio Tuba case sets forth the controlling doctrine. We note however. In Commissioner of Internal Revenue vs. is insufficient to support petitioners claim. Court of Appeals and Atlas Consolidated Mining and Development Corporation [23] (the second Atlas case). per kilogram. if the denatured alcohol is mixed with gasoline. (j) Aviation turbo-jet fuel. In categorically ruling that Private Respondent Atlas Consolidated Mining and Development Corporation was entitled to a refund based on Sections 1 and 2 of RA 1435. we stated: Since the private respondents claim for refund covers specific taxes paid from 1980 to July 1983 then we find that the private respondent is entitled to a refund. liquified petroleum gas used for motive power shall be taxed at the equivalent rate as the specific tax on diesel fuel oil. sixty-one centavos.. per liter of volume capacity. (e) Processed gas. Specific tax on diesel fuel oil. . In that Resolution. and all similar fuel oils. fifty centavos. RA 1435. That unless otherwise provided for by special laws. the removal of denatured alcohol of not less than one hundred eighty degrees proof (ninety per centum absolute alcohol) shall be deemed to have been removed for motive power. We have carefully scrutinized RA 1435 and the subsequent pertinent statutes and found no expression of a legislative will authorizing a refund based on the higher rates claimed by petitioner. Davide. per kilogram. 156. reiterated our pronouncement in Commissioner of Internal Revenue vs.A. [20] Since the partial refund authorized under Section 5. petitioners claim of refund on the basis of the specific taxes it actually paid must expressly be granted in a statute stated in a language too clear to be mistaken. only the alcohol content shall be subject to the tax herein prescribed. Jr.(d) On denatured alcohol to be used for motive power. that the latter law does not specifically provide for a refund to these mining and lumber companies of specific taxes paid on manufactured and diesel fuel oils. however. That. this Court cannot presume otherwise. per liter of volume capacity. per kilogram. through Mr. (h) Asphalts. No. A tax cannot be imposed unless it is supported by the clear and express language of a statute. (i) Greases. which tax shall attach to this fuel oil as soon as it is in existence as such. twenty-five and one- half centavos. that Rio Tuba is not entitled to the whole amount it claims as refund. once the tax is unquestionably imposed. per liter of volume capacity. and not in Section 1. the Court. is in the nature of a tax exemption. Justice Hilario G. For the purpose of this subsection. [a] claim of exemption from tax payments must be clearly shown and based on language in the law too plain to be mistaken. It should be made clear. the CIR contended that the refund should be based on Sections 1 and 2 of RA 1435. unless shown to the contrary. per liter of volume capacity. Provided.

No. Court of Tax Appeals. should apply. (104 SCRA 710 [1981]). 1435 and not on the increased rates under Sections 153 and 156 of the Tax Code of 1977. v. in view of Insular which was decided en banc. the Court did not decide or make any pronouncement on the issue in that case. the basis for the refund shall be the amounts deemed paid under Sections 1 and 2 of R. the decision in G. an en banc decision. the issue raised in the first Atlas case was whether the claimant was entitled to the refund under Section 5. NO. computed on the basis of the amounts deemed paid under Sections 1 and 2 of R. and Insular Lumber Co. [28] We disagree. and First Atlas Case Not Inconsistent With Rio Tuba and Second Atlas Case Petitioner argues that the applicable jurisprudence in this case should be Commissioner of Internal Revenue vs. Neither Insular Lumber Co. On the other hand. Since the grant of refund privileges must be strictly construed against the taxpayer. a dilemma has been created as to whether or not Insular Lumber. since the applicable rates were still those prescribed under Sections 1 and 2 of RA 1435. Clearly. The private respondents CLAIM for REFUND is GRANTED.A. we find no basis for petitioners invocation of the constitutional proscription that no doctrine or principle of law laid down by the Court in a decision rendered en banc or in division may be modified or reversed except by the Court sitting en banc.Rio Tuba and the second Atlas case did. the issue now before us did not exist at the time. which has been decided by the Honorable Court en banc.[26] We find no conflict between these two pairs of cases. 1435. or Rio Tuba. Atlas Consolidated and Mining Corp.In Insular Lumber Co. According to an eminent authority on taxation. an unsigned resolution.) Insular Lumber Co. Although Atlas purchased petroleum products in the years 1976 to 1978 when the rates had already been changed. Thus. which was decided only [by] the Third Division of the Honorable Court. it is impossible for these two decisions to clash with our pronouncement in Rio Tuba and second Atlas case.[25] Petitioner also asks the Court to take a second look at Rio Tubaand the second Atlas case.A. the Court held that the authorized partial refund under Section 5 of R. the petition is hereby DENIED and the assailed Decision of the Court of Appeals is AFFIRMED. decided a claim for refund on specific tax paid on petroleum products purchased in the year 1963.R. regardless of what was actually paid under the increased rates. (the first Atlas case). both decided by Divisions. SECOND DIVISION . notwithstanding its failure to pay any additional tax under a municipal or city ordinance. 83583-84 is hereby MODIFIED. that since Atlass claims for refund cover specific taxes paid before 1985. ACCORDINGLY. In this light. provided the claims are not yet barred by prescription. nor the first Atlas case ruled on the issue of whether the refund privilege underSection 5 should be computed based on the specific tax deemed paid under Sections 1 and 2 of RA 1435. without interest.[24] We rule. Petitioner posits that [I]n view of the similarity of the situation of herein petitioner with Insular Lumber Company (claimant in Insular Lumber) and Rio Tuba Nickel Mining Corporation (claimant in Rio Tuba). 1435.[27] Finally. No. 1435 partakes of the nature of a tax exemption and therefore cannot be allowed unless granted in the most explicit and categorical language. in which we ruled that the refund granted be computed on the basis of the amounts deemed paid under Sections 1 and 2 of RA 1435. Court of Tax Appeals.[29] WHEREFORE. it should be granted the refund based on the rates specified by Sections 1 and 2 of R. SO ORDERED.A.A. there is no tax exemption solely on the ground of equity. Nos. vs. No. therefore. petitioner asserts that equity and justice demand that the computation of the tax refunds be based on actual amounts paid under Sections 153 and 156 of the NIRC. Insular Lumber Co. when the increased rates under the NIRC of 1977 were not yet in effect. (Underscoring supplied.

During that period.084.. Accordingly[. Chairperson... J. and paid the BIR P17...918.92.37 plus interests in the amount of P14. of the Court of Appeals in CA-G. in view of all the foregoing. to allege in her petition the date of filing the final adjustment return..] the Petition for Review is hereby DISMISSED.. On March 21....... the CTA dismissed respondents petition. Intel withheld the taxes due on respondents compensation income and remitted to the Bureau of Internal Revenue (BIR) the amount of P308.693. 1999 a petition for review docketed as C. 2007 x.COMMISSIONER OF INTERNAL G. SP No. Claiming that the income taxes withheld and paid by Intel and respondent resulted in an overpayment of P340.A. In its Resolution dated August 4. J. 5828 with the Court of Tax Appeals (CTA). SO ORDERED.. the Court of Appeals ruled that respondents filing of an amended return indicating an overpayment was sufficient . through her representative. JR. For the period January 1.R. Inc. Later. JJ.. as represented Promulgated: by Virgilio A..... 1996 to December 31.. TINGA. 5828 and ordered the latter to resolve respondents petition for review.. The Commissioner of Internal Revenue (CIR) moved to dismiss the petition for failure of respondent to file the mandatory written claim for refund before the CIR. 1997.[7] Upon review. ROSEMARIE ACOSTA.. filed an amended return and a Non-Resident Citizen Income Tax Return. deprived the court of its jurisdiction over the subject matter of the case.56. 2002. On October 8.76.versus - CARPIO MORALES... (Intel).. August 3..A....274. and VELASCO.T... respondent and her husband filed with the BIR their Joint Individual Income Tax Return for the year 1996...-x DECISION QUISUMBING..[4] respondent filed on April 15.. 1996.T. The facts are as follows: Respondent is an employee of Intel Manufacturing Phils..R. For one. the CTA noted that respondents omission. 1997. Case No..... Present: QUISUMBING. Case No. respondent was assigned in a foreign country....63... the Court of Appeals reversed the CTA and directed the latter to resolve respondents petition for review.. inadvertently or otherwise.. . on June 17. Petitioner. [5] Second.: Assailed in this petition for review are the Decision [1] and Resolution[2] dated February 13.. 154068 REVENUE.455.[6] The decretal portion of the CTAs resolution states: WHEREFORE.. 1997. she filed another amended return indicating an overpayment of P358. Abogado. 1999. the CTA ruled that respondent failed to file a written claim for refund with the CIR. 2002 and May 29. 1999 of the Court of Tax Appeals in C.. CARPIO.. Applying Section 204(c)[8] of the 1997 National Internal Revenue Code (NIRC). Respondent. No. Respondents Motion to Dismiss is GRANTED. 55572 which had reversed the Resolution[3] dated August 4. respondent. a condition precedent to the filing of a petition for review before the CTA. respectively..

[10] Petitioner sought reconsideration.[15] (Emphasis ours. unable to agree with respondents submission on this score. The claim for refund must be a categorical demand for reimbursement. On the other hand. this Court GRANTS it due course and REVERSES the appealed Resolutions and DIRECTS the Court of Tax Appeal[s] to resolve the petition for review on the merits.274. respondent invokes the liberal application of technicalities in tax refund cases.compliance with the requirement of a written claim for refund. the requirements under Section 230 for refund claims are as follows: 1. Inc. Court of Appeals. respondent contends that the filing of an amended return indicating an overpayment of P358. but it was denied. conformably with our ruling in BPI-Family Savings Bank. A written claim for refund or tax credit must be filed by the taxpayer with the Commissioner. which was effective starting only on January 1. WHETHER OR NOT THE 1997 TAX REFORM ACT CAN BE APPLIED RETROACTIVELY.) . The applicable law on refund of taxes pertaining to the 1996 compensation income is Section 230 of the old Tax Code. SO ORDERED.63 constitutes a written claim for refund pursuant to the clear proviso stated in the last sentence of Section 204(c) of the 1997 NIRC (new Tax Code). does the amended return filed by respondent indicating an overpayment constitute the written claim for refund required by law. [14] We are. xxxx Along the same vein. Noteworthy. however. 1998. to wit: xxxx Provided. finding the petition to be meritorious. however. First. we must first resolve two issues. and not Section 204(c) of the new Tax Code. 3. thereby vesting the CTA with jurisdiction over this case? Second. II. He claims that an actual written claim for refund is necessary before a suit for its recovery may proceed in any court. WHETHER OR NOT THE CTA HAS JURISDICTION TO TAKE [COGNIZANCE] OF RESPONDENTS PETITION FOR REVIEW. v. Hence. the instant petition raising the following questions of law: I. The claim for refund or tax credit must be filed. can the 1997 NIRC be applied retroactively? Petitioner avers that an amended return showing an overpayment does not constitute the written claim for refund required under Section 230[12] of the 1993 NIRC[13] (old Tax Code).[11] While the main concern in this controversy is the CTAs jurisdiction. which was the law then in effect. or the suit or proceeding therefor must be commenced in court within two (2) years from date of payment of the tax or penalty regardless of any supervening cause. 2. That a return filed showing an overpayment shall be considered as a written claim for credit or refund.[9] The decretal portion of the Court of Appeals decision reads: WHEREFORE.

[20] Moreover. 2002.R. hence. On the second issue. As well said in a prior case. This obviously is intended. [18] To repeat. respectively. we cannot agree with the Court of Appeals finding that the nature of the instant case calls for the application of remedial laws. to notify the government that such taxes have been questioned. inadvertently or otherwise. but also pursue it to its appropriate conclusion before seeking judicial intervention in order to give the administrative agency an opportunity to decide the matter itself correctly and prevent unnecessary and premature resort to court action. Respondent. points out that when the petition was filed with the CTA on April 15.A. unless the language of the statute clearly provides otherwise. 55572 are REVERSED and SET ASIDE. and the notice should then be borne in mind in estimating the revenue available for expenditure. first. to afford the CIR an opportunity to correct the action of subordinate officers. we cannot agree that the amended return filed by respondent constitutes the written claim for refund required by the old Tax Code. the 1997 NIRC was already in effect. revenue laws are not intended to be liberally construed. tax laws must be faithfully and strictly implemented. petitioner argues that the 1997 NIRC cannot be applied retroactively as the instant case involved refund of taxes withheld on a 1996 income. 2002 and May 29. it cannot be allowed to exist upon a mere vague implication or inference [17] nor can it be extended beyond the ordinary and reasonable intendment of the language actually used by the legislature in granting the refund. the law is clear. A claimant must first file a written claim for refund. strict compliance with the conditions imposed for the return of revenue collected is a doctrine consistently applied in this jurisdiction. The Resolution dated August 4. by respondent in her petition for review. we find that we cannot give retroactive application to Section 204(c) abovecited. After a thorough consideration of this matter. respondent had no reason at that time to think that the filing of an amended return would constitute the written claim for refund required by applicable law. despite the fact that the refund being sought pertains to a 1996 income tax. Case No. Note that the issue on the retroactivity of Section 204(c) of the 1997 NIRC arose because the last paragraph of Section 204(c) was not found in Section 230 of the old Code. the 1997 NIRC was not yet in effect. the price we pay for civilization. v. SO ORDERED. 1999. In our view. we rule against respondents contention. as the taxpayer therein filed a written claim for refund aside from presenting other evidence to prove its claim. even the date of filing of the Final Adjustment Return was omitted. Additionally. Both the assailed Decision and Resolution dated February 13. SP No. however. categorically demanding recovery of overpaid taxes with the CIR.[19] Under the circumstances of this case. Court of Appeals. We have to stress that tax laws are prospective in operation. 5828 is hereby REINSTATED. of the Court of Appeals in CA-G. As tax refunds involve a return of revenue from the government. the claimant must show indubitably the specific provision of law from which her right arises.[16] Thus. Section 204(c) should apply. as the CTA stressed. and second. the law prevailing at that time. WHEREFORE. . No pronouncement as to costs. Neither can we apply the liberal interpretation of the law based on our pronouncement in the case of BPI-Family Savings Bank. Furthermore. Revenue statutes are substantive laws and in no sense must their application be equated with that of remedial laws.[22] Considering that taxes are the lifeblood of the government and in Holmess memorable metaphor. Entrenched in our jurisprudence is the principle that tax refunds are in the nature of tax exemptions which are construed strictissimi juris against the taxpayer and liberally in favor of the government. it should be emphasized that a party seeking an administrative remedy must not merely initiate the prescribed administrative procedure to obtain relief. the petition is GRANTED. unlike this case before us. [21] This the respondent did not follow through. it could not escape notice that at the time respondent filed her amended return.T. for it deprived the CTA of its jurisdiction over the subject matter of the case. Finally. This omission was fatal to respondents claim. Inc. Hence. before resorting to an action in court. on the first issue. 1999 of the Court of Tax Appeals in C.

60) per forty (40) kilogram bag on all importations of gray Portland cement for a period not exceeding two hundred (200) days from the date of issuance by the Bureau of Customs (BOC) of the . market share.[3] The SMA provides the structure and mechanics for the imposition of emergency measures. No. if not controlling interests in at least twelve (12) of its member-corporations. Accordingly. Antecedent Facts Petitioner Southern Cross Cement Corporation (Southern Cross) is a domestic corporation engaged in the business of cement manufacturing.[10] After preliminary investigation. definitive safeguard measures on the import of cement pursuant to the SMA. 8751 (on the imposition of countervailing duties). production. enacted Republic Act (Rep. It has eighteen (18) members. 2004] SOUTHERN CROSS CEMENT CORPORATION.A. petitioner.The questions submitted to the Court relate to the means and the procedures ordained in the law to ensure that the determination of the imposition or non-imposition of a safeguard measure is proper. THE SECRETARY OF THE DEPARTMENT OF TRADE & INDUSTRY. 8800. Rep. and THE COMMISSIONER OF THE BUREAU OF CUSTOMS. Cemex S. purportedly the largest cement manufacturers in Japan. Act No. so observed Robert Frost. the archetype of traditional New England detachment. respondents. as well as caused depressed local prices. vs. is not put into question by the petition at bar. it appears that considerable equity holdings. of France.: Good fences make good neighbors. Its principal stockholders are Taiheiyo Cement Corporation and Tokuyama Corporation. J. respondent Department of Trade and Industry (DTI) accepted an application from Philcemcor. of Switzerland (formerly Holderbank Financiere Glaris. then later. however. [8] On 22 May 2001.A. July 8. Act No. Rep. namely Financiere Lafarge S. 158540. de C. Philcemcorfiled the application in behalf of twelve (12) of its member-companies. finally. the DTI issued an Order. imposing a provisional measure equivalent to Twenty Pesos and Sixty Centavos (P20. 8752 (on the imposition of anti-dumping duties) and.. importation and exportation.). and Holcim Ltd. While Philcemcor heralds itself to be an association of domestic cement manufacturers.[4] The wisdom of the policies behind the SMA. [11] On 7 November 2001. THE PHILIPPINE CEMENT MANUFACTURERS CORP. capacity utilization. the Bureau of Import Services of the DTI. The Frost ethos has been heeded by nations adjusting to the effects of the liberalized global market. including tariffs. DECISION TINGA. also known as the Safeguard Measures Act (SMA) [2] soon after it joined the General Agreement on Tariff and Trade (GATT) and the World Trade Organization (WTO) Agreement. Ltd. alleging that the importation of gray Portland cement [9]in increased quantities has caused declines in domestic production. Philcemcor sought the imposition at first of provisional.[1] The Philippines. of Mexico. [7]per Record. THE SECRETARY OF THE DEPARTMENT OF FINANCE.R. for one. then Holderfin B. SECOND DIVISION [G.[5] Private respondent Philippine Cement Manufacturers Corporation[6] (Philcemcor) is an association of domestic cement manufacturers. to protect domestic industries and producers from increased imports which inflict or could inflict serious injury on them. Act) No. sales and employment.V.. were acquired by the three largest cement manufacturers in the world.V. determined that critical circumstances existed justifying the imposition of provisional measures.

Gray Portland cement is being imported into the Philippines in increased quantities. 7.[15] Subsequently. Thus. However. attended by several concerned parties. received a request from the DTI for a formal investigation to determine whether or not to impose a definitive safeguard measure on imports of gray Portland cement.implementing Customs Memorandum Order. After quoting the conclusions of the Tariff Commission.[17] On 13 March 2002. serious injury. [18] production and sales. Japan and Taiwan. to take effect that same day and to remain in force for two hundred (200) days.[12] The corresponding Customs Memorandum Order was issued on 10 December 2001. as well as that of Southern Cross and two other cement importers.[24] The DTI received the Report on 14 March 2002. . the DTI requested an opinion from the Department of Justice (DOJ) on the DTI Secretarys scope of options in acting on the Commissions recommendations. 5. i. A notice of commencement of formal investigation was published in the newspapers on 21 November 2001. the Embassies of Indonesia. The collective output of the twelve (12) applicant companies constitutes a major proportion of the total domestic production of gray Portland cement and blended Portland cement.[20] financial performance and profitability.[26] On 5 April 2002. The increase in volume of imports is recent.[16] The Tariff Commission also visited the corporate offices and manufacturing facilities of each of the applicant companies. 2.[13] In the meantime. then DTI Secretary Manuel Roxas II (DTI Secretary) disagreed with the conclusion of the Tariff Commission that there was no serious injury to the local cement industry caused by the surge of imports.[22] The Tariff Commission arrived at the following conclusions: 1. pursuant to Section 9 of the SMA and its Implementing Rules and Regulations. the Tariff Commission received several position papers both in support and against Philcemcorsapplication. the Tariff Commission issued its Formal Investigation Report (Report). it is hereby recommended that no definitive general safeguard measure be imposed on the importation of gray Portland cement. Causation has become moot and academic in view of the negative determination of the elements of serious injury and imminent threat of serious injury. Subsequently. Individual notices were likewise sent to concerned parties. The industry has not suffered and is not suffering significant overall impairment in its condition.[23] Accordingly.[21] and return on sales. the DTI Secretary promulgated a Decision. to wit: The elements of serious injury and imminent threat of serious injury not having been established. 8800) and the terms and conditions of the Agreement on Safeguards. 3. Nonetheless. then DOJ Secretary Hernando Perez rendered an opinion stating that Section 13 of the SMA precluded a review by the DTI Secretary of the Tariff Commissions negative finding. Locally produced gray Portland cement and blended Portland cement (Pozzolan) are like to imported gray Portland cement. including Southern Cross.A. 4.[19] capacity utilization. cement workers groups. the Tariff Commission.e. both in absolute terms and relative to domestic production. consumer groups. various importers and exporters. on 19 November 2001. There is no threat of serious injury that is imminent from imports of gray Portland cement. [14] A preliminary conference was held on 27 November 2001. 6. After reviewing the report. such inquiry is governed by the national legislation (R. [25] In view of this disagreement. The circumstances provided in Article XIX of GATT 1994 need not be demonstrated since the product under consideration (gray Portland cement) is not the subject of any Philippine obligation or tariff concession under the WTO Agreement. non-government organizations and concerned government agencies. he ruled as follows: The DTI has no alternative but to abide by the [Tariff] Commissions recommendations. Among the factors studied by the Tariff Commission in its Report were the market share of the domestic industry. starting in 2000. contractors/builders associations. sudden. the DTI Secretary noted the DTIs disagreement with the conclusions. sharp and significant. or finding that a definitive safeguard measure should not be imposed. such as Philcemcor. he also cited the DOJ Opinion advising the DTI that it was bound by the negative finding of the Tariff Commission. the Tariff Commission made the following recommendation.. industry associations.

Provided.[33] Southern Cross timely filed a Motion for Reconsideration of the Resolution on 9 September 2002. it filed with the Court of Appeals a Petition for Certiorari. that the government shall not be liable for any interest on the amount to be returned. according to Southern Cross. 02-2001) is hereby denied. The Secretary shall not accept for consideration another petition from the same industry. on 19 February 2003.[36]granting in part Philcemcors petition. Prohibition and Mandamus[28]seeking to set aside the DTI Decision. vested as he is under the law with the power of review. the Court of Appeals directed Philcemcor to comment on Southern Crosss Motion for Reconsideration. through the Secretary of Finance. Alleging that Philcemcor was not entitled to provisional relief. the Court of Appeals failed to directly resolve the Motion for Reconsideration. speedy and adequate remedy. Southern Cross filed its Comment. Instead. The DTI hereby issues the following: The application for safeguard measures against the importation of gray Portland cement filed by PHILCEMCOR (Case No. The appellate court ruled that it had jurisdiction over the petition for certiorari since it alleged grave abuse of discretion. It likewise argued that Philcemcors resort to the special civil action of certiorari is improper. The uninterrupted assessment of the tariff. Southern Cross likewise sought a clarificatory order as to whether the grant of the writ of preliminary injunction could extend the earlier imposition of the provisional measure beyond the two hundred (200)-day limit imposed by law. Southern Cross echoed the DOJ Opinion that Section 13 of the SMA precludes a review by the DTI Secretary of a negative finding of the Tariff Commission. Ten days later. The appeals court failed to take immediate action on Southern Crosss motion despite the four (4) motions for early resolution the latter filed between September of 2002 and February of 2003. the BOC continued to impose the provisional measure on all importations of Portland cement made by Southern Cross. that courts should not interfere in matters addressed to the sound discretion and coming under the special technical knowledge and training of such agencies. After conducting a hearing on 19 June 2002 on Philcemcors application for preliminary injunction.[32] Seven days later.IN VIEW OF THE FOREGOING. it held that the DTI Secretary is not bound by the factual findings of the Tariff Commission since such findings are merely recommendatory and they fall within the ambit of the Secretarys . as the case may be.[27] (Emphasis in the original) Philcemcor received a copy of the DTI Decision on 12 April 2002.[29] On 10 June 2002. and. it rendered a Decision. considering that what Philcemcor sought to rectify is an error of judgment and not an error of jurisdiction or grave abuse of discretion. as well as the Tariff Commissions Report. the Secretary shall immediately issue.[34] After Philcemcor filed its Opposition[35] on 13 March 2003. for it is on the Court of Tax Appeals (CTA) that the SMA conferred jurisdiction to review rulings of the Secretary in connection with the imposition of a safeguard measure. Despite the efforts of Southern Cross. the two-hundred (200)-day period for the imposition of the provisional measure expired. Philcemcor likewise applied for a Temporary Restraining Order/Injunction to enjoin the DTI and the BOC from implementing the questioned Decision and Report. as it is predicated on a flawed framework. worked to its detriment to the point that the continued imposition would eventually lead to its closure. a written instruction to the Commissioner of Customs. Southern Cross filed another set of four (4) motions for early resolution. citing the rule that factual findings of administrative agencies are binding upon the courts and its corollary.[30] It argued that the Court of Appeals had no jurisdiction over Philcemcors Petition. that the Report is void. It prayed that the Court of Appeals direct the DTI Secretary to disregard the Report and to render judgment independently of the Report. Philcemcor argued that the DTI Secretary. is not bound to adopt the recommendations of the Tariff Commission. Despite the lapse of the period. the Court of Appeals Twelfth Division[31] granted the writ sought in its Resolution dated 21 June 2002. previously collected as provisional general safeguard measure within ten (10) days from the date a final decision has been made. It refused to annul the findings of the Tariff Commission. or if the cash bond is in excess of the definitive safeguard duty assessed. authorizing the return of the cash bond or the remainder thereof. on 5 June 2003. and that a petition for review with the CTA was available as a plain. and in accordance with Section 13 of RA 8800 which states: In the event of a negative final determination. on 28 June 2002. After six (6) months.[37] Nevertheless. inconsistent inferences and erroneous methodology. Finally. with respect to the same imports of the product under consideration within one (1) year after the date of rendering such a decision.

The petition argues in the main that the Court of Appeals has no jurisdiction over Philcemcors petition. among others. the case is REMANDED to the public respondent Secretary of Department of Trade and Industry for a final decision in accordance with RA 8800 and its Implementing Rules and Regulations. bag for three years on imported gray Portland Cement. and not deciding the substantial questions in accordance with law and jurisprudence. The timely filing of Southern Crosss petition before this Court necessarily prevented the Court of Appeals Decision from becoming final.[43] On 7 July 2003. a brief comment on Southern Crosss application for provisional relief.[46] At the oral argument. 2002 Decision of the Secretary of the Department of Trade and Industry is hereby SET ASIDE. and. the proper remedy being a petition for review with the CTA conformably with the SMA. seeking to enjoin the DTI Secretary from enforcing his Decision of 25 June 2003 in view of the pending petition before this Court. that the factual findings of the Tariff Commission on the existence or non-existence conditions warranting the imposition of general safeguard measures are binding upon the DTI Secretary. the assailed April 5. in the form of a definitive safeguard duty in the amount of P20. (iii) whether a Temporary Restraining Order is warranted. counsel for Southern Cross manifested that due to the imposition of the general safeguard measures.[45] After giving due course to Southern Crosss Petition. the DTI Secretary issued a new Decision. could only review the ruling of the DTI Secretary when a safeguard measure is imposed. Philcemcor filed with this Court a Manifestation and Motion to Dismiss in regard to Southern Crosss petition. Philcemcor filed an opposition.[48] Propriety of the Temporary Restraining Order Before the merits of the Petition. alleging that it deliberately and willfully resorted to forum-shopping. Southern Cross filed with the Court a Very Urgent Application for a Temporary Restraining Order and/or A Writ of Preliminary Injunction (TRO Application). Southern Cross filed with the CTA a Petition for Review.[47] During the oral arguments. It sought to enjoin the DTI Secretary from enforcing the definitive safeguard measure he imposed in . On 1 August 2003. being a special court of limited jurisdiction. Philcemcor also argues that the CTA. Consequently. Southern Cross was forced to cease operations in the Philippines in November of 2003.[44] Reiterating its Comment on Southern Crosss Petition for Review. petitioners prayer to set aside the findings of the Tariff Commission in its assailed Report dated March 13. Southern Cross filed the present petition. assailing the appellate courts Decision for departing from the accepted and usual course of judicial proceedings. Prescinding from this action. SO ORDERED. based on the foregoing premises. that it is not this Court but the CTA that has jurisdiction over the application under the law. 2002 is DENIED. and that the factual findings of the Tariff Commission are not binding on the DTI Secretary. It points out that Southern Crosss TRO Application seeks to enjoin the DTI Secretarys second decision. and. the Court simplified the issues in this wise: (i) whether the Decision of the DTI Secretary is appealable to the CTA or the Court of Appeals. the Court called the case for oral argument on 18 February 2004. It determined that the legislative intent is to grant the DTI Secretary the power to make a final decision on the Tariff Commissions recommendation. while its Petition before the CTA prays for the annulment of the same decision. [41] He made a determination that. the local cement industry had suffered serious injury as a result of the import surges. On the other hand.[42] Accordingly. whether its Decision is in accordance with law. attended by the counsel for Philcemcor and Southern Cross and the Office of the Solicitor General.[38]The dispositive portion of the Decision reads: WHEREFORE.[39] On 23 June 2003. ruling this time that that in light of the appellate courts Decision there was no longer any legal impediment to his deciding Philcemcors application for definitive safeguard measures. (ii) assuming that the Court of Appeals has jurisdiction.discretionary review. contrary to the findings of the Tariff Commission. claiming. assailing the DTI Secretarys 25 June 2003 Decision which imposed the definite safeguard measure.60/40 kg. he imposed a definitive safeguard measure on the importation of gray Portland cement.[40] Yet on 25 June 2003.

The Court . speedy and adequate remedy in the ordinary course of law. Any interested party who is adversely affected by the ruling of the Secretary in connection with the imposition of a safeguard measure may file with the CTA. [50] In that regard. discussed the issue of whether or not the DTI Secretary is bound to adopt the negative recommendation of the Tariff Commission on the application for safeguard measure. Abuse of discretion is admittedly within the ambit of certiorari. the special civil action of certiorari is available only when there is no plain. in the assailed Decision.[52] This evinces a clear legislative intent that the imposition of safeguard measures. [55] However. thus: A perusal of the instant petition reveals allegations of grave abuse of discretion on the part of the DTI Secretary in rendering the assailed April 5. The Forum-Shopping Issue In the same breath.[57] (Emphasis supplied) It is not difficult to divine why the legislature singled out the CTA as the court with jurisdiction to review the ruling of the DTI Secretary in connection with the imposition of a safeguard measure. which states that the filing of a petition for review before the CTA does not stop.[51] A similar philosophy is expressed by Section 29 of the SMA. however. after asserting only in brief that it had jurisdiction over Philcemcors Petition.The Section reads: Section 29. It is alleged that. as the case may be. Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. the Court of Appeals. that the filing of such petition for review shall not in any way stop. Section 218 of the Tax Reform Act of 1997 prohibits any court from granting an injunction to restrain the collection of any national internal revenue tax. should not be enjoined notwithstanding any timely appeal of the imposition. Rule 7 of the 1997 Rules of Civil Procedure in order that sanction may be had is that the acts of the party or his counsel clearly constitute willful and deliberate forum shopping. [53] The standard implies a malicious intent to subvert procedural rules. The Court of Appeals maintained that it had jurisdiction over the petition. a petition for review of such ruling within thirty (30) days from receipt thereof. Provided.[54] We do not doubt that the Court of Appeals certiorari powers extend to correcting grave abuse of discretion on the part of an officer exercising judicial or quasi-judicial functions. stressing that Section 29 of the SMA is a plain. speedy and adequate remedy in the ordinary course of law which Philcemcor did not avail of. a peremptory judicial act which is traditionally frowned upon. [49] unless there is a clear statutory basis for it. we are not convinced that the allegation of forum-shopping has been duly proven. Judicial Review. The Jurisdictional Issue On to the merits of the present petition. or that sanction should befall upon Southern Cross and its counsel. despite the availability of judicial review. 2002 Decision wherein it was ruled that he had no alternative but to abide by the findings of the Commission on the matter of safeguard measures for the local cement industry. The standard by Section 5. and such state of mind is not evident in this case. suspend. the DTI Secretary gravely abused his discretion in wantonly evading to discharge his duty to render an independent determination or decision in imposing a definitive safeguard measure. suspend or otherwise toll the imposition or collection of the appropriate tariff duties or the adoption of other appropriate safeguard measures. fee or charge imposed by the internal revenue code. or otherwise toll the imposition or collection of the appropriate tariff duties or the adoption of other appropriate safeguard measures. In its assailed Decision. as it alleged grave abuse of discretion on the part of the DTI Secretary. The Court did not grant the provisional relief for it would be tantamount to enjoining the collection of taxes. The petition for review shall comply with the same requirements and shall follow the same rules of procedure and shall be subject to the same disposition as in appeals in connection with adverse rulings on tax matters to the Court of Appeals.[56] Southern Cross relies on this limitation.his 25 June 2003 Decision.

[61] Of course. the SMA expanded the jurisdiction of the CTA by including review of the rulings of the DTI Secretary in connection with the imposition of safeguard measures. Split jurisdiction is abhorred. The reviewing tribunal will be called upon to examine the same facts and the same laws. Rep. however. (ii) the petition must be filed by an interested party adversely affected by the ruling. This interpretation cannot be favored. provisional or general. Act No. Such setup is as novel and unusual as it is cumbersome and unwise. The provision refers to the Court of Appeals but only in regard to procedural rules and dispositions of appeals from the CTA to the Court of Appeals. there would have been no need to make any deeper inquiry as to the extent of the CTAs jurisdiction. The reasons are as follows: First. [58] By the very nature of its function. 1125. The third requisite deserves closer scrutiny. the DTI Secretary would be evaluating only one body of facts and applying them to one set of laws. [63] The power of the DTI Secretary to adopt or withhold a safeguard measure emanates from the same statutory source. The first two requisites are clearly present. respondents position is that judicial review of the DTI Secretarys ruling is exercised by two different courts. as the Court has consistently refused to sanction split jurisdiction. and (iii) such ruling must be in connection with the imposition of a safeguard measure.has long recognized the legislative determination to vest sole and exclusive jurisdiction on matters involving internal revenue and customs duties to such a specialized court. 9282. and it is not if what is appealed is a negative determination. 8800. Thus. but not when his ruling is not to impose such measure. in case of nonagricultural product. whether or not the determination is positive or negative. Act No. does not extend to it the power to review decisions of the DTI Secretary in connection with the imposition of safeguard measures. commodity or article xxx involving xxx safeguard measures under Republic Act No. the CTA is dedicated exclusively to the study and consideration of tax problems and has necessarily developed an expertise on the subject. Philcemcor and the public respondents agree that the CTA has appellate jurisdiction over a decision of the DTI Secretary imposing a safeguard measure. But as Rep. In deciding whether or not to impose a safeguard measure. Under Section 29 of the SMA.[64] The Court cannot accept that such was the legislative motive especially considering that the law expressly confers on the CTA. it is the CTA which has jurisdiction to review his decision. Essentially. Rep. the role of judicial review without mention of any other court that may exercise corollary or ancillary jurisdiction in relation to the SMA.[65] . in this case where the DTI Secretary decides not to impose a safeguard measure. 9282 already been in force at the beginning of the incidents subject of this case. if the DTI decision involves the imposition of a safeguard measure it is the CTA which has appellate jurisdiction. and in either case the court exercising jurisdiction does so to the exclusion of the other. expressly vests unto the CTA jurisdiction over [d]ecisions of the Secretary of Trade and Industry. and it boggles the mind why the appeal modality would be such that one appellate court is qualified if what is to be reviewed is a positive determination. the tribunal with the specialized competence over tax and tariff matters. In short. if we were to rule for respondents we would be confirming the exercise by two judicial bodies of jurisdiction over basically the same subject matterprecisely the split-jurisdiction situation which is anathema to the orderly administration of justice. its jurisdiction to take cognizance of a case should be clearly conferred and should not be deemed to exist on mere implication. However.[59] At the same time.[62] Had Rep. otherwise. depending on whether or not it imposes a safeguard measure. 9282 cannot be applied retroactively to the present case. it is the Court of Appeals. the question of whether such jurisdiction extends to a decision not to impose a safeguard measure will have to be settled principally on the basis of the SMA. since the CTA is a court of limited jurisdiction. enacted on 30 March 2004. where either party may appeal the decision to impose or not to impose said duties. In a related development. there are three requisites to enable the CTA to acquire jurisdiction over the petition for review contemplated therein: (i) there must be a ruling by the DTI Secretary. Act No. respondents advocate that Section 29 of the SMA has established split appellate jurisdiction over rulings of the DTI Secretary on the imposition of safeguard measure. Act No. the statute creating the CTA. at that time which was before the advent of trade liberalization the notion of safeguard measures or safety nets was not yet in vogue. [60] Concededly. Undeniably. Contrary to the stance of the public respondents and Philcemcor. Essentially.

let us determine the maximum scope and reach of the phrase in connection with as used in Section 29 of the SMA.[81] With the explicit grant of certain powers involving safeguard measures by the SMA on the DTI Secretary. Travelers Ins. this time.[75] Thus. Split jurisdiction is not favored. all controversies relating to the subject matter pertaining to its specialization are deemed to be included within the jurisdiction of said administrative agency or body. universally. and if in the affirmative. the CTA is vested with jurisdiction to review the ruling of the DTI Secretary in connection with the imposition of a safeguard measure. whether or not to impose the general safeguard measure. A literalist reading or linguistic survey may not satisfy. it follows that he is empowered to rule on several issues. As expounded later.[72] A similar inquiry into the other provisions of the SMA is in order to determine the scope of review accorded therein to the CTA. Section 29 allows the CTA to review not only the ruling imposing a safeguard measure. but all other rulings related or have reference to the application for such measure. or from the date he made motu proprio initiation. reduce or modify his previous rulings on the general safeguard measure. that neither did the law expressly grant to the CTA the power to review a negative determination. in interpreting a key provision of the Employee Retirement Security Act of 1974. Even the US Supreme Court in New York State Blue Cross Plans v. the phrase in connection with not only qualifies but clarifies the succeeding phrase imposition of a safeguard measure.[74] Section 29 is likewise explicit that only the rulings of the DTI Secretary or the Agriculture Secretary may be reviewed by the CTA.[80] or terminate. [77] Pursuant to a positive preliminary determination. the Secretary is empowered to extend the safeguard measure. Delta Air Lines. on the other hand.[71] Thus. the phrase also encompasses the opposite or converse ruling which is the non-imposition of a safeguard measure.[68] the United States Supreme Court.[67] Second. to determine whether the general safeguard measure should be imposed or not. The interpretation of the provisions of the SMA favors vesting untrammeled appellate jurisdiction on the CTA. then respondents claim would have indisputable merit. the Secretary shall make a preliminary determination on whether the increased imports of the product under consideration substantially cause or threaten to cause serious injury to the domestic industry. what general safeguard measures should be applied. resorted to looking at the statute and its objectives as the alternative to an uncritical literalism. Within thirty (30) days from receipt of a petition seeking the imposition of a safeguard measure. A plain reading of Section 29 of the SMA reveals that Congress did not expressly bar the CTA from reviewing a negative determination by the DTI Secretary nor conferred on the Court of Appeals such review authority. This is affirmed not just by jurisprudential fiat. the acts of other bodies that were granted some powers by the SMA..[70] conceded that the phrases relate to or in connection with may be extended to the farthest stretch of indeterminacy for. Had the law been couched instead to incorporate the phrase the ruling imposing a safeguard measure. Homestead Property Corporation[66] is applicable to the case at bar: The Court agrees with the observation of the [that] when an administrative agency or body is conferred quasi-judicial functions. Under the SMA. after receipt of the report of the Tariff Commission. under the clear text of the law. such as the Tariff Commission.These are the issues which arise in . are not subject to direct review by the CTA. with the use of the phrase in connection with. Inc. the Secretary may also decide that the imposition of a provisional safeguard measure would be warranted under Section 8 of the SMA. Undoubtedly. and in the Secretary of the Department of Agriculture in the case of agricultural products. relations or connections are infinite and stop nowhere. The principle enunciated in Tejada v. In the American case of Shaw v. [69] There is no serious dispute that the phrase in connection with is synonymous to relates to or reference to.[73] The authority to decide on the safeguard measure is vested in the DTI Secretary in the case of non- agricultural products. construed the phrase relates to in its normal sense which is the same as if it has connection with or reference to. Consequently. Respondents note.[76] Such ruling is crucial since only upon the Secretarys positive preliminary determination that a threat to the domestic industry exists shall the matter be referred to the Tariff Commission for formal investigation. examining the same phrase of the same provision of law involved in Shaw. but also the acquired connotative meaning of in connection with in common parlance. the Department Secretary concerned is authorized to decide on several matters. However. in the case the US High Court. [78] The Secretary is also authorized to decide. Now. [79] Even after the general safeguard measure is imposed. and that all three phrases are broadly expansive.

or in relation to. such negative ruling is a ruling of the Secretary in connection with the imposition of a safeguard measure.[84] Even assuming arguendo that Section 29 has not expressly granted the CTA jurisdiction to review a negative ruling of the DTI Secretary. Court of Appeals: A tribunal. Certiorari is often resorted to in order to correct errors of jurisdiction. allowing the Secretary to make successive rulings. and the same degree of discretion as the imposition by the DTI Secretary of a safeguard measure. Ut Evitur Inconveniens Et Absurdum. thus depriving the affected party the chance to elevate the ruling on appeal on the rudimentary grounds of errors in fact or in law. Interpretatio Talis In Ambiguis Semper Fienda Est. this negative ruling is susceptible to reversal only through a special civil action for certiorari. the rulings of the DTI Secretary in connection with a safeguard measure. And there is grave abuse of discretion where the tribunal. the same statutory prescriptions. On a literal level. arise from the same grant of jurisdiction on the DTI Secretary by the SMA. Clearly. Indeed. Given the relative expanse of decisions subject to judicial review by the CTA under Section 29. While an appeal may be predicated on errors of fact or errors of law. we do not doubt that a negative ruling refusing to impose a safeguard measure falls within the scope of its jurisdiction. being clothed with the power to determine the case. pertain to all rulings of the DTI Secretary or Agriculture Secretary which arise from the time an application or motu proprio initiation for the imposition of a safeguard measure is taken. whimsical. board or officer oversteps its/his authority as determined by law. the tribunal. For a special civil action for certiorari to succeed. which is a mistake of judgment. that is the CTA to initially review all the rulings related to such initiatory application or action. as intended by Congress. and despite whatever indications that the DTI Secretary acted with measure and within the bounds of his jurisdiction are. the aggrieved party will be forced to resort to a .[86] It is very conceivable that the DTI Secretary. Indeed. the scope and reach of the phrase in connection with. in lieu of an appeal to the CTA. There is excess of jurisdiction where. Both directions Congress put in place by employing the phrase in connection with in the law. the post-formal investigation stage. after deliberate thought and careful evaluation of the evidence. [82] The refusal by the DTI Secretary to grant a safeguard measure involves the same grant of authority. board or officer acts without jurisdiction if it/he does not have the legal power to determine the case. From the legislative standpoint. a special civil action for certiorari is grounded on grave abuse of discretion or lack of or excess of jurisdiction on the part of the decider.[85] Adopting the respondents position favoring the CTAs minimal jurisdiction would unnecessarily lead to illogical and onerous results. considering the absurdity of the consequences. Respondents might argue that the right to relief from a negative ruling is not lost since the applicant could. it was a matter of sense and practicality to lump up the questions related to the initiatory application or action for safeguard measure and to assign only one court and. On a more critical level. Third. it is not enough that the questioned act of the respondent is wrong. The position of the respondents is one of uncritical literalism [83] incongruent with the animus of the law. may either make a negative preliminary determination as he is so empowered under Section 7 of the SMA. beginning with the preliminary determination. the Court is precluded from favoring an interpretation that would cause inconvenience and absurdity. Yet these two reliefs are of differing natures and gravamen. the incidents which require resolution come to the fore only because there is an initial application or action seeking the imposition of a safeguard measure. question such ruling through a special civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure. Moreover. or the post-safeguard measure stage yet all these issues do become ripe for resolution because an initiatory action has been taken seeking the imposition of a safeguard measure. a fundamentalist approach to Section 29 is not warranted. appeal is the remedy. They may arise at different stages the preliminary investigation stage. the imposition of a safeguard measure. however diverse the outcome may be. board or officer acts in a capricious. as Philcemcor did. It is the initiatory action for the imposition of a safeguard measure that sets the wheels in motion. Adopting the respondents theory. Instead. it is illiberal to assume that Congress had intended to provide appellate relief to rulings imposing a safeguard measure but not to those declining to impose the measure. as it is one of the possible outcomes that may result from the initial application or action for a safeguard measure. or refuse to adopt the definitive safeguard measure under Section 13 of the same law.connection with. As the Court clarified in Sempio v. Where the error is one of law or of fact. arbitrary or despotic manner in the exercise of his judgment as to be said to be equivalent to lack of jurisdiction. therefore.

(emphasis supplied) The plain meaning of Section 5 shows that it is the Tariff Commission that has the power to make a positive final determination. Section 5 reads: Sec. contorting the straight and narrow in an effort to discombobulate the courts into believing that what was within was actually beyond and what was studied and deliberate actually whimsical and capricious.gymnastic exercise. notwithstanding a negative determination made by the Tariff Commission. Section 29 of the SMA is worded in such a way that it places under the CTAs judicial review all rulings of the DTI Secretary. It reads: The petition for review shall comply with the same requirements and shall follow the same rules of procedure and shall be subject to the same disposition as in appeals in connection with adverse rulings on tax matters to the Court of Appeals. this theoretical quandary need not come to pass. The next issue for resolution is whether the factual determination made by the Tariff Commission under the SMA is binding on the DTI Secretary. the second paragraph of Section 29 similarly reveals the legislative intent that rulings of the DTI Secretary over safeguard measures should first be reviewed by the CTA and not the Court of Appeals. This is the only passage in the SMA in which the Court of Appeals is mentioned. Issue of Binding Effect of Tariff Commissions Factual Determination on DTI Secretary.[88] . Court of Appeals: Certiorari is a remedy narrow in its scope and inflexible in its character. however. What then would be the remedy of the party aggrieved by a negative ruling that simply erred in interpreting the facts or the law? It certainly cannot be the special civil action for certiorari. However. The express wish of Congress is that the petition conform to the requirements and procedure under Rule 43 of the Rules of Civil Procedure. Conditions for the Application of General Safeguard Measures. whether absolute or relative to the domestic production. The implication of the Court of Appeals holding is that the DTI Secretary may adopt a definitive safeguard measure. must be distinguished from the power to impose the general safeguard measure which is properly vested on the DTI Secretary. On another note. so is the question of whether to impose or not to impose a definitive safeguard measure. Otherwise stated. for as the Court held in Silverio v. Section 13 details the procedure for the adoption of a safeguard measure. The Court of Appeals relied upon Section 13 of the SMA in ruling that the findings of the Tariff Commission do not necessarily constitute a final decision. This is sound and proper in light of the specialized jurisdiction of the CTA over tax matters. Undoubtedly. as to be a substantial cause of serious injury or threat thereof to the domestic industry. This power lodged in the Tariff Commission. In the same way that a question of whether to tax or not to tax is properly a tax matter. the question is whether the DTI Secretary may impose general safeguard measures in the absence of a positive final determination by the Tariff Commission. The Secretary shall apply a general safeguard measure upon a positive final determination of the [Tariff] Commission that a product is being imported into the country in increased quantities. Section 13 prescribes certain limitations and restrictions before general safeguard measures may be imposed. It is not a general utility tool in the legal workshop.[87] Fortunately. Since Congress mandated that the form and procedure adopted be analogous to a review of a CTA ruling by the Court of Appeals. the Secretary shall first establish that the application of such safeguard measures will be in the public interest. in the case of non-agricultural products. the most fundamental restriction on the DTI Secretarys power in that respect is contained in Section 5 of the SMAthat there should first be a positive final determination of the Tariff Commissionwhich the Court of Appeals curiously all but ignored. which are connected with the imposition of a safeguard measure. 5. the legislative contemplation could not have been that the appeal be directly taken to the Court of Appeals. as well as the steps to be taken in case there is a negative final determination.

the plain meaning of Section 5 emphasizes that only if the Tariff Commission renders a positive determination could the DTI Secretary impose a safeguard measure. in the case of non-agricultural products the Secretary must establish that the application of such safeguard measures is in the public interest. The legislature is presumed to know the meaning of the words. may improperly acquire the mantle of legislative intent by the sole . It is also clear from Section 5 of the SMA that the positive final determination to be undertaken by the Tariff Commission does not entail a mere gathering of statistical data. and it is impossible to finagle a different conclusion even through overarching methods of statutory construction. Second. The SMA establishes a distinct allocation of functions between the Tariff Commission and the DTI Secretary.[91] Moreover. The plain meaning of Section 5 shows that it is the Tariff Commission that has the power to make a positive final determination. Debates in the constitutional convention "are of value as showing the views of the individual members. which belongs to the Tariff Commission. as a positive final determination clearly antecedes. as a condition precedent. the legislative record. it must be given its literal meaning and applied without attempted interpretation. plain and free from ambiguity. First. and to have expressed its intent by the use of such words as are found in the statute. in order to assert a misleading interpretation. All in all. Under Section 5. [92] which interprets Section 5 of the law. that such importation is a substantial cause of serious threat or injury to the domestic industry.[94] Indeed. [95] Our holding in Civil Liberties Union v. [89] As Southern Cross argues. This power. The effect can be dangerous. to have used words advisedly. The distinction is vital. the DTI Secretary is tasked to decide whether or not that the application of the safeguard measures is in the public interest.[97] Moreover. but they give us no light as to the views of the large majority who did not talk xxx. the imposition of a general safeguard measure. Resort to the congressional records to ascertain legislative intent is not warranted if a statute is clear. and to have expressed its intent by the use of such words as are found in the statute. Executive Secretary[96] on the resort to deliberations of the constitutional convention to interpret the Constitution is likewise appropriate in ascertaining statutory intent: While it is permissible in this jurisdiction to consult the debates and proceedings of the constitutional convention in order to arrive at the reason and purpose of the resulting Constitution.[93] Yet as explained earlier. We think it safer to construe the constitution from what appears upon its face. to have used words advisedly. it has to establish causal linkages from the statistics that it compiles and evaluates: after finding there is an importation in increased quantities of the product in question. should be approached with extreme caution. In order to arrive at such determination. resort thereto may be had only when other guides fail as said proceedings are powerless to vary the terms of the Constitution when the meaning is clear. plain and free from ambiguity. anecdotal ruminations. notwithstanding the positive final determination of the Tariff Commission. or even the occasional crude witticisms. The legislature is presumed to know the meaning of the words. a positive final determination does not necessarily result in the imposition of a general safeguard measure. it is easy to selectively cite passages. there are two condition precedents that must be satisfied before the DTI Secretary may impose a general safeguard measure on grey Portland cement. and as indicating the reasons for their votes. if at all to be availed of. The Court of Appeals relies heavily on the legislative record of a congressional debate during deliberations on the SMA to assert a purported legislative intent that the findings of the Tariff Commission do not bind the DTI Secretary. likewise requires a positive final determination on the part of the Tariff Commission before the application of the general safeguard measure. The verba legis or plain meaning rule rests on the valid presumption that the words employed by the legislature in a statute correctly express its intent or will and preclude the court from construing it differently. must be distinguished from the power to impose general safeguard measure properly vested on the DTI Secretary. Section 5 is quite clear-cut. as to be a substantial cause of serious injury or threat to the domestic industry. There is no safer nor better settled canon of interpretation that when language is clear and unambiguous it must be held to mean what it plainly expresses:[90] In the quotable words of an illustrious member of this Court. Rule 5 of the Implementing Rules and Regulations of the SMA. Minority or solitary views. thus: [I]f a statute is clear. as legislative debates and proceedings are powerless to vary the terms of the statute when the meaning is clear. At the same time. there must be a positive final determination by the Tariff Commission that a product is being imported into the country in increased quantities (whether absolute or relative to domestic production). sometimes out of their proper context.

resort to legislative deliberations is allowable when the statute is crafted in such a manner as to leave room for doubt on the real intent of the legislature. statutory grant. In Cario. tariff rates. Article XIII of the Constitution. including the provision of trade adjustment assistance.virtue of their publication in the authoritative congressional record. being a preserve of the legislature. the limitations imposed by Section 5 are absolute. the Constitution also grants the delegating authority (Congress) the right to impose restrictions and limitations on the taxation power delegated to the President. it also recognized that such latitude flowed from. [110] Yet. the citation is misplaced. Thus. which precisely are the subject of delegation under Section 28(2).[101] At the same time. Article VI of the 1987 Constitution. the Court ruled that the constitutional power of the Commission on Human Rights (CHR) to investigate human rights violations did not extend to adjudicating claims on the merits. by law. having the final decision on the safeguard measure. it does not flow from any inherent executive power. which basically are tariff imposts of the type spoken of in the Constitution. [108] Philcemcor claims that the functions of the Tariff Commission being only investigatory. and other duties or imposts within the framework of the national development program of the Government. and is consequently limited by.[103] to impose definitive general safeguard measures. (b) a decrease in or the imposition of a tariff-rate quota on the product. Such legislative intent should be given full force and effect. which delineates the powers and functions of the CHR. as alter ego of the President. the means of procuring testimony upon which he may act. yet ensures that the prerogative of Congress to impose limitations and restrictions on the executive exercise of this power: The Congress may. Except for the provision of trade adjustment assistance. or imposition of any duty on the imported product.[106] Thus in Lamb. For that matter. it could neither decide nor adjudicate. Hence. is also inapplicable owing to the different statutory regimes prevailing over that case and the present petition.[99] The safeguard measures which the DTI Secretary may impose under the SMA may take the following variations. [t]he statutes of the United States require[d] xxx to exercise his judgment upon the legality xxx [of] provisions of law and resolutions of Congress providing for the payment of money. has the power to evaluate the findings of the Tariff Commission and make an independent judgment thereon. [98] Section 28(2). by nature and by command of the fundamental law. warranted as they are by a constitutional fiat. whom. [102] The restrictions and limitations imposed by Congress take on the mantle of a constitutional command. However. without modifying the . (d) one or more appropriate adjustment measures. the measures enumerated by the SMA are essentially imposts. the provision of the Constitution in point expressly recognizes the authority of Congress to prescribe limitations in the case of tariffs.[100] This delegation of the taxation power by the legislative to the executive is authorized by the Constitution itself. authorize the President to fix within specified limits. while the Court recognized the wide latitude of discretion that may have been vested on the Insular Auditor. However. The SMA empowered the DTI Secretary. as the Court recognized. in this case. Commissioner on Human Rights. to wit: (a) an increase in. Phipps[105] to assert that the DTI Secretary. The DTI Secretary authority is derived from the SMA. the law did not grant him full.[107] likewise cited by Philcemcor. Given the constitutional and statutory limitations governing the present case. the broad discretion granted to the Insular Auditor of the Philippine Islands cannot be analogous to the discretion of the DTI Secretary which is circumscribed by Section 5 of the SMA. uninhibited discretion to impose such measures. import and export quotas.[109] The applicable law governing the issue in Cario is Section 18. Thus. but only to investigate all forms of human rights violations.[104] Philcemcor cites our 1912 ruling in Lamb v. tonnage and wharfage dues. and (e) any combination of the above- described actions. Lamb pertained to the discretion of the Insular Auditor of the Philippine Islands. (c) a modification or imposition of any quantitative restriction on the importation of the product into the Philippines. Cario v. which the executive branch is obliged to observe. and subject to such limitations and restrictions as it may impose. The provision does not vest on the CHR the power to adjudicate cases. Section 5 plainly evinces legislative intent to restrict the DTI Secretarys power to impose a general safeguard measure by preconditioning such imposition on a positive determination by the Tariff Commission. Article VI of the 1987 Constitution confirms the delegation of legislative power. as the executive power to impose definitive safeguard measures is but a delegated powerthe power of taxation. export/import quotas and other such safeguard measures.

A general safeguard measure shall be terminated where the benefiting industry fails to show any improvement.[113] Section 13 of the SMA lays down the procedure to be followed after the Tariff Commission renders its report. including the provision of trade adjustment assistance. the precedent is inapplicable because of the difference in the involved statutory frameworks. as may be determined by the Secretary. (e) Any combination of actions described in subparagraphs (a) to (d). Adoption of Definitive Measures. unless clear justification is given that a different level is necessary to prevent or remedy a serious injury. [112] It is of no consequence that such determination results from the exercise of investigatory powers by the Tariff Commission since Congress is well within its constitutional mandate to limit the authority of the DTI Secretary to impose safeguard measures in the manner that it sees fit. as the case may be. in the form of: (a) An increase in. shall be reviewed at regular intervals for purposes of liberalizing or reducing its intensity. The industry benefiting from the application of a general safeguard measure shall be required to show positive adjustment within the allowable period. Admittedly. through the Secretary of Finance. 13. however.thorough disquisition of the Court in Cario on the general limitations on the investigatory power. (c) A modification or imposition of any quantitative restriction on the importation of the product into the Philippines. Congress did intend to bind the DTI Secretary to the determination made by the Tariff Commission. previously collected as provisional general safeguard measure within ten (10) days from the date a final . Rather. or if the cash bond is in excess of the definitive safeguard duty assessed. or imposition of. (b) A decrease in or the imposition of a tariff-rate quota (MAV) on the product. The Secretary shall issue a written instruction to the heads of the concerned government agencies to implement the appropriate general safeguard measure as determined by the Secretary within fifteen (15) days from receipt of the report. Article VI of the Constitution. however. a written instruction to the Commissioner of Customs. Upon its positive determination. The general safeguard measure shall be limited to the extent of redressing or preventing the injury and to facilitate adjustment by the domestic industry from the adverse effects directly attributed to the increased imports: Provided. The provision reads in full: SEC. such measures shall not reduce the quantity of imports below the average imports for the three (3) preceding representative years. That developing countries with less than three percent (3%) share collectively account for not more than nine percent (9%) of the total imports. authorizing the return of the cash bond or the remainder thereof. The decision imposing a general safeguard measure. any duty on the imported product. But reliance should not be placed on the textual imprecisions. The Constitution does not repose binding effect on the results of the CHRs investigation. the duration of which is more than one (1) year. [111] On the other hand. The Court of Appeals and Philcemcor also rely on Section 13 of the SMA and Rule 13 of the SMAs Implementing Rules in support of the view that the DTI Secretary may decide independently of the determination made by the Tariff Commission. That when quantitative import restrictions are used. through Section 5 of the SMA and under the authority of Section 28(2). to alleviate the injury or threat thereof to the domestic industry. and to facilitate positive adjustment to import competition. there are certain infelicities in the language of Section 13 and Rule 13. (d) One or more appropriate adjustment measures. Section 13 and Rule 13 must be viewed in light of the fundamental prescription imposed by Section 5. In the event of a negative final determination. A general safeguard measure shall not be applied to a product originating from a developing country if its share of total imports of the product is less than three percent (3%): Provided. the Secretary shall immediately issue. including the initiation of international negotiations to address the underlying cause of the increase of imports of the product. The Commission may also recommend other actions. the Commission shall recommend to the Secretary an appropriate definitive measure.

Nothing in Section 13 contradicts the instruction in Section 5 that the DTI Secretary is allowed to impose the general safeguard measures only if there is a positive determination made by the Tariff Commission. as it contemplates the appropriate general safeguard measure as determined by the Secretary within fifteen (15) days from receipt of the report. Clearly.[121] The recommendations of the Tariff Commission. [115] and the Tariff Commission to make the final determination. are not obligatory on the DTI Secretary. such choice also relates to the mandate of the DTI Secretary to establish that the application of safeguard measures is in the public interest. the word determined in this context pertains to the DTI Secretarys power of choice of the appropriate safeguard measure. the DTI Secretary may impose definitive safeguard measure only if there is a positive final determination made by the Tariff Commission. as opposed to the Tariff Commissions power to determine the existence of conditions necessary for the imposition of any safeguard measure.decision has been made: Provided. pertains to the factual findings on whether there are increased imports into the country of the product under consideration. import/export quotas and other similar measures.[122] The non-binding force of the Tariff Commissions recommendations is congruent with the command of Section 28(2). a recommendation is a suggested remedial measure submitted by the Tariff Commission under Section 13 after making a positive final determination in accordance with Section 5. note must be taken of the distinction between the investigatory and recommendatory functions of the Tariff Commission under the SMA. the SMA requires that the DTI Secretary establish that the application of such safeguard measures is in the public interest.[123] It is the DTI Secretary. Quite plainly. Article VI of the 1987 Constitution that only the President may be empowered by the Congress to impose appropriate tariff rates.[114]The SMA explicitly authorizes the DTI Secretary to make a preliminary determination. its determination has a different effect on the DTI Secretary. as used in the SMA. also within the fifteen (15) day period. as these functions are not interchangeable. then the DTI Secretary is bound by thedetermination made by the Tariff Commission. The word determination. notwithstanding the Tariff Commissions recommendation on the appropriate safeguard measure based on its positive final determination. Nothing in the SMA mandates the DTI Secretary to adopt the recommendations made by the Tariff Commission. A contrary conclusion would in essence unduly arrogate to the Tariff Commission the executive power to impose the appropriate tariff measures. The Tariff Commission makes its determination only after a formal investigation process. with such investigation initiated only if there is a positive preliminary determination by the DTI Secretary under Section 7 of the SMA. including the initiation of international negotiations to address the underlying cause of the increase of imports of the products. The Tariff Commission is not empowered to make a recommendation absent a positive final determination on its part. Some confusion may arise because the sixth paragraph of Section 13 [124] uses the variant word determined in a different context. [119] Under Section 13.2 of the Implementing Rules of the SMA is captioned Final Determination by the Secretary. To better comprehend Section 13.[117] On the other hand. Unlike the recommendations of the Tariff Commission. That is why the SMA empowers the DTI Secretary to adopt safeguard measures other than those recommended by the Tariff Commission. with respect to the same imports of the product under consideration within one (1) year after the date of rendering such a decision. and on whether such increased imports are a substantial cause of serious injury or threaten to substantially cause serious injury to the domestic industry. Rule 13.[118] In contrast. The Secretary shall not accept for consideration another petition from the same industry. to alleviate the injury or threat thereof to the domestic industry and to facilitate positive adjustment to import competition. Unfortunately. who under the SMA may impose such safeguard measures subject to the limitations imposed therein.[120] The Tariff Commission may also recommend other actions. The assailed Decision and Philcemcor latch on this phraseology to imply that the factual . as rendered under Section 13. the Tariff Commission is required to recommend to the [DTI] Secretary an appropriate definitive measure. That the government shall not be liable for any interest on the amount to be returned. Only on the basis of a positive final determination made by the Tariff Commission under Section 5 can the DTI Secretary impose a general safeguard measure. When the definitive safeguard measure is in the form of a tariff increase. [116] The distinction is fundamental. such increase shall not be subject or limited to the maximum levels of tariff as set forth in Section 401(a) of the Tariff and Customs Code of the Philippines. In fact. In relation to Section 5. as alter egoof the President.

the divergent use in Rule 13. the DTI cannot exercise review powers over the Tariff Commission which is not its subordinate office. an office of higher rank. however. (Emphasis supplied. that in the case of non-agricultural products. The assailed Decision characterizes the findings of the Tariff Commission as merely recommendatory and points to the DTI Secretary as the authority who renders the final decision. the Secretary shall first establish that the imposition of the safeguard measure will be in the public interest.2. and as such do not include the power to decide or adjudicate. They run counter to the statutory prescription that a positive final determination made by the Tariff Commission should first be obtained before the definitive safeguard measures may be laid down. The Rule does not remove the essential requirement under Section 5 that a positive final determination be made by the Tariff Commission before a definitive safeguard measure may be imposed by the DTI Secretary. this Court does not inquire into the wisdom of the legislature but only charts the boundaries of powers and functions set in its enactments.a. It falls under the supervision. amend or modify in any way the determination made by the Tariff Commission. thus: RULE 13. Rule 13. viewed in the context of the fundamental requisite set forth by Section 5.2 is explicable as the Rule textually pertains to the power of the DTI Secretary to review the recommendations of the Tariff Commission. not of the DTI nor of the Department of Finance (as mistakenly asserted by Southern Cross). offices.2. The matter of safeguard measures is of such national importance that a decision either to impose or not to impose then could have ruinous effects on . which in the latter case is undeviatingly in reference to the determination made by the Tariff Commission. for a regulation which operates to create a rule out of harmony with the statute is a nullity.2 respects the logical order imposed by the SMA. If the determination is affirmative.2.determination rendered by the Tariff Commission under Section 5 may be amended or reversed by the DTI Secretary. For one.[128] the DTI Secretary generally cannot exercise review authority over actions of the Tariff Commission.2.) Moreover. [125] Yet imperfect draftsmanship aside. [129] At the same time. within two (2) calendar days after making his decision. He shall also furnish a copy of his Order to the petitioner and other interested parties. the Secretary shall also order its publication in two (2) newspapers of general circulation. it is not difficult to see the internal logic of this statutory framework. Within fifteen (15) calendar days from receipt of the Report of the Commission.2 of the Implementing Rules is dissonant with the same word as employed in the SMA. Philcemcor asserts that the Tariff Commissions functions are merely investigatory. however. not the latters determination. a written instruction to the heads of the concerned government agencies to immediately implement the appropriate general safeguard measure as determined by him. taking into consideration the measures recommended by the Commission. from imposing a safeguard measure? Of course. the Secretary shall make a decision. Indeed. the mechanism established by Congress establishes a measure of check and balance involving two different governmental agencies with disparate specializations. RULE 13.b. Was it anomalous for Congress to have provided for a system whereby the Tariff Commission may preclude the DTI. nothing in Rule 13. Moreover.2. Provided.But then. Within two (2) calendar days after making his decision. These contentions. Neither does the SMA specifically authorize the DTI Secretary to alter. whether affirmative or negative. not clash. but not its determination. an independent planning agency of the government of co-equal rank as the DTI. and agencies under him.[127] As the supervision and control of a Department Secretary is limited to the bureaus. implementing rules should conform.c. an examination of the specific provisions show that there is no real conflict to reconcile. the DTI Secretary does not have the power to review the findings of the Tariff Commission for it is not subordinate to the Department of Trade and Industry (DTI). Of course. are untenable. The word determination as used in Rule 13. as earlier stated. RULE 13. This can be seen by examining the specific provisions of Rule 13. with the law that they seek to implement. Beyond the resulting confusion. the Secretary shall issue. The most that the DTI Secretary could do to express displeasure over the Tariff Commissions actions is to ignore its recommendation.2 implies that the DTI Secretary can set aside the determination made by the Tariff Commission under the aegis of Section 5.[126] but of the National Economic Development Authority. Final Determination by the Secretary RULE 13.

The pertinent portion of the GATT Agreement on Safeguards reads: 2. 1.[135] and whether the imposition of a provisional measure is warranted under Section 8 of the SMA. (a) A Member may apply a safeguard measure only following an investigation by the competent authorities of that Member pursuant to procedures previously established and made public in consonance with Article X of the GATT 1994. Section 5 enumerates what the Tariff Commission is tasked to determine: (a) whether a product is being imported into the country in increased quantities. it is ideal to put in place a system which affords all due deliberation and calls to fore various governmental agencies exercising their particular specializations. providing interested parties the opportunity to present evidence or otherwise be heard.[138] To repeat. not protectionism.[133] Satisfied as we are with the proper statutory paradigm within which the SMA should be analyzed. exporters and other interested parties could present evidence and their views.[130] 3. if this arrangement drawn up by Congress makes it difficult to obtain a general safeguard measure. Finally. [139] The findings of the Tariff Commission as to these matters constitute the final determination. absolute or relative to domestic production and whether any such increase is a substantial cause of serious injury or threat thereof to the domestic industry. After the initiation of an action involving a general safeguard measure. under whose framework trade liberalization. and under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive products. the flaws in the reasoning of the Court of Appeals and in the arguments of the respondents become apparent. rather than the rule. irrespective of whether the product is absolute or relative to the domestic production. In the process. Moreover. including the initiation of international negotiations to address the underlying cause of the increase of imports of the products. if the Tariff Commission makes a positive determination. it is implied that no further action will be taken on the application. pursuant to the provisions set out below.[137] 3. Southern Cross stresses that applying the provision of the GATT Agreement on Safeguards. The Philippines is obliged to observe its obligations under the GATT. it holds public hearings. it is because such safeguard measure is the exception. When his preliminary determination is positive. The competent authorities shall publish a report setting forth their findings and reasoned conclusions reached on all pertinent issues of fact and law. which may be either positive or negative. [136] If the preliminary determination is negative. To better understand the dynamics of the procedure set up by the law leading to the imposition of definitive safeguard measures.companies doing business in the Philippines. absolute or relative to domestic production. the Tariff Commission is clearly empowered to arrive at binding conclusions.[140] . as to whether or not the application of a safeguard measure would be in the public interest. The two requisites laid down in Section 5 for a positive final determination are the same conditions provided under the GATT Agreement on Safeguards for the application of safeguard measures by a member country. is laid down. to alleviate the injury or threat thereof to the domestic industry. This investigation shall include reasonable public notice to all interested parties and public hearings or other appropriate means in which importers. the Tariff Commission recommends to the [DTI] Secretary an appropriate definitive measure. 2. the investigatory procedure laid down by the SMA conforms to the procedure required by the GATT Agreement on Safeguards. and (b) whether the importation in increased quantities is such that it causes serious injury or threat to the domestic industry. a brief step-by-step recount thereof is in order. A Member may only apply a safeguard measure to a product only if that member has determined. Under Section 13 of the SMA. keyed towards making a final determination. the GATT actually prescribes conditions before a member-country may impose a safeguard measure. 4. Congress has chosen the Tariff Commission as the competent authority to conduct such investigation. but to complement it. the Secretary immediately transmits the records covering the application to the Tariff Commission for immediate formal investigation. including the opportunity to respond to the presentations of other parties and to submit their views. The Tariff Commission conducts its formal investigation. and to facilitate positive adjustment to import competition. [134] the DTI Secretary makes a preliminary determination whether the increased imports of the product under consideration substantially cause or threaten to substantially cause serious injury to the domestic industry.[131] The SMA was designed not to contradict the GATT. The Tariff Commission may also recommend other actions. Verily. Thus. [132] We agree: binding on the DTI Secretary is the Tariff Commissions determinations on whether a product is imported in increased quantities. that such product is being imported into its territory in such increased quantities. inter alia.

as to what appropriate safeguard measures should he impose. If the Tariff Commission makes a positive final determination. it being an attempt to carry out such null judgment. if the Tariff Commission makes a negative final determination. Consequently. the Court also recognizes the fundamental principle that a null and void judgment cannot produce any legal effect. with the instruction that the DTI Secretary may impose a general safeguard measure even if there is no positive final determination from the Tariff Commission. seeking to enforce a judicial decision which is not yet final and actually pending review on appeal. the Court of Appeals could not have acquired jurisdiction over Philcemcors petition for certiorari in the first place. Since the 5 June 2003 Decision derives its legal effect from the void Decision of the Court of Appeals. its nullity would be warranted even if the DTI Secretary chose to uphold his earlier ruling denying the application for safeguard measures. SO ORDERED. the assailed Decision is an absolute nullity. At the same time. the DTI Secretary cannot impose any definitive safeguard measure. The DTI Secretary may be beyond the ambit of administrative review by this Court. It is clear then that the 25 June 2003 Decision of the DTI Secretary is a product of the void Decision. he is instructed instead to return whatever cash bond was paid by the applicant upon the initiation of the action for safeguard measure. there is no legal impediment for the Secretary to decide on the application. 5. as Section 29 of the SMA properly vests jurisdiction on the CTA. especially from the instrumentalities and officials of government. Conversely. the petition is GRANTED. There is sufficient cause to establish that the 5 June 2003 Decision of the DTI Secretary resulted from the assailed Court of Appeals Decision. The Decision of the DTI Secretary dated 25 June 2003 is also DECLARED NULL AND VOID and SET ASIDE.[141] The inescapable conclusion is that the DTI Secretary needed the assailed Decision of the Court of Appeals to justify his rendering a second Decision. even if the latter had not yet become final. Thus. Under Section 13. It is also an unfortunate spectacle to behold the DTI Secretary. No Costs. obverse ruling. More crucially. The DTI Secretary himself acknowledged that he drew stimulating force from the appellate courts Decision for in his own 5 June 2003 Decision. within fifteen (15) days from receipt of the report. WHEREFORE. It does not even matter what the disposition of the 25 June 2003 Decision was. but we are capacitated to allocate the boundaries set by the law of the land and to exact fealty to the legal order. However. this ruling of the DTI Secretary is consequently void. he or she would have readily been subjected to sanction by this Court. There is therefore no choice but to declare it void as well. The spring cannot rise higher than the source. he declared: From the aforementioned ruling. the DTI Secretary is then to decide. it can be concluded that it was because of the putative imprimatur of the Court of Appeals Decision that the DTI Secretary issued his ruling imposing the safeguard measure. What is the effect of the nullity of the assailed Decision on the 5 June 2003 Decision of the DTI Secretary imposing the general safeguard measure? We have recognized that any initial judicial review of a DTI ruling in connection with the imposition of a safeguard measure belongs to the CTA. and implicitly recognized that without such Decision he would not have the authority to revoke his previous ruling and render a new. 6. and we declare it as such. The assailed Decision of the Court of Appeals is DECLARED NULL AND VOID and SET ASIDE. the CA has remanded the case to the DTI Secretary for a final decision. The Effect of the Courts Decision The Court of Appeals erred in remanding the case back to the DTI Secretary. He explicitly invoked the Court of Appeals Decision as basis for rendering his 5 June 2003 ruling. Had it been a judge who attempted to enforce a decision that is not yet final and executory. Lutz v Araneta (1955) . lest we sanction the perverse existence of a fruit from a non-existent tree.

L-19824... as Judicial Administrator of the Intestate Estate of Antonio Jayme Ledesma.R. ISSUE: Is the tax valid? HELD: Yes. the legislature found that the general welfare demanded that the industry should be stabilized. Ma-ao Sugar Central Co. Philsugin for short. The act is primarily an exercise of police power and is not a pure exercise of taxing power. for the purpose of introducing into the sugar industry such practices or processes that will reduce the cost of production. constitute expenditure of tax money for private purposes. Further.40 paid by the estate as taxes from the Commissioner under Section e of Commonwealth Act 567 or the Sugar Adjustment Act. either agricultural or industrial. to provide means for the rehabilitation and stabilization of the threatened sugar industry. Nos.. and provided that the distribution of benefits had to sustain. INC. MA-AO SUGAR CENTRAL CO. protection and advancement redounds greatly to the general welfare. Assistant Solicitor General Antonio Torres and Solicitor Ceferino Padua.. i.. BACOLOD-MURCIA MILLING CO. increase and improve the industrialization of the by-products of sugar cane. The tax is levied with a regulatory purpose. Bacolod Murcia Milling Co. REGALA. vs.. Republic of the Philippines SUPREME COURT Manila EN BANC G. etc.. Republic Act No. and TALISAY- SILAY MILLING COMPANY. 632 is the charter of the Philippine Sugar Institute.e. utilization of by-products. a semi-public corporation created for the following purposes and objectives: (a) To conduct research work for the sugar industry in all its phases. as well as to the improvement of living and working conditions in sugar mills and plantations without any part of such money being channeled directly to private persons.. defendants-appellants. sister companies under one controlling ownership and management. and Talisay-Silay Milling Co. INC. Inc. it cannot be said that the devotion of tax money to experimental stations to seek increase of efficiency in sugar production. As sugar production is one of the great industries of the Philippines and its promotion. Hence. Meer. . Meer and Meer. Barredo. for plaintiff-appellee. J..Lutz v Araneta GR No L-7859 December 22. Enrique M. and achieve greater efficiency in the industry. alleging that such tax is unconstitutional as it levied for the aid and support of the sugar industry exclusively. Office of the Solicitor General Antonio P. L-19825 and 19826 July 9. plaintiff-appellee.666. 1966 REPUBLIC OF THE PHILIPPINES. the tax is valid. 1955 FACTS: Walter Lutz. Inc. from a decision of the Court of First Instance of Manila finding them liable for special assessments under Section 15 of Republic Act No.. 632. which is in his opinion not a public purpose.: This is a joint appeal by three sugar centrals. Fernando and Emma Quisumbing-Fernando for defendants-appellants. sought to recover the sum of P14.

and (f) To improve the living and economic conditions of laborers engaged in the sugar industry by the gradual and effective correction of the inequalities existing in the industry. rails. subject to existing laws. or help establish. manufacture. machineries. materials. (e) To grant loans. (d) To buy. Sec. (c) To insure a permanent. and said levy shall constitute a lien on their sugar quedans and/or warehouse receipts. Special Fund. and any other equipment and material to the production. materials. on reasonable terms. The amount shall be borne by the sugar cane planters and the sugar centrals in the proportion of their corresponding milling share. — The proceeds of the foregoing levy shall be set aside to constitute a special fund to be known as the "Sugar Research and Stabilization Fund. and operate one central experiment station and such number of regional experiment stations in any part of the Philippines as may be necessary to undertake extensive research in sugar cane culture and manufacture. including studies as to the feasibility of merchandising sugar cane farms. (e) To promote the effective merchandising of sugar and its by-products in the domestic and foreign markets so that those engaged in the sugar industry will be placed on a basis of economic security. keep. — To raise the necessary funds to carry out the provisions of this Act and the purposes of the corporation. Specific and General Powers. sell. (Section 2. railroad lines. or public or private corporation. maintain and operate.(b) To improve existing methods of raising sugar cane and of sugar manufacturing. and form part of the said fund to be available solely for the use of the corporation. assign. Capitalization. The specific and general powers of the Philsugin are set forth in Section 8 of the same law. (d) To establish and maintain such balanced relation between production and consumption of sugar and its by-products. merchant vessels. and any other means of transportation. the control and eradication of pests. with the Government of the Philippines or . handling. firm. equipment and supplies as may be necessary to prosecute successfully such researches and experimental work. — For carrying out the purposes mentioned in the preceding section.10] per picul of sugar to be collected for a period of five (5) years beginning the crop year 1951-1952. Act 632) To realize and achieve these ends. own. transportation and warehousing of sugar and its by-products. (f) To enter. All the income and receipts derived from the special fund herein created shall accrue to. as well insure stabilized prices at a level sufficient to cover the cost of production plus a reasonable profit. the selected and propagation of high-yielding varieties of sugar cane suited to Philippine climatic conditions. buildings. equipment. to planters when it deems such loans advisable." which shall be available exclusively for the use of the corporation. (b) To purchase such machinery. make and execute contracts of any kind as may be necessary or incidental to the attainment of its purposes with any person. Rep. the PHILSUGIN shall have the following powers: (a) To establish. 3. Sections 15 and 16 of the aforementioned law provide: Sec. sufficient and balanced production of sugar and its by-products for local consumption and exportation. keep. 16. 15. to wit: Sec. and such other pertinent studies as will be useful in adjusting the sugar industry to a position independent of existing trade preference in the American market. warehouses. maintain. rent or lease. and to promote and maintain a sufficient general production of sugar and its by-products by an efficient coordination of the component elements of the sugar industry of the country. and such marketing conditions therefor. there shall be levied on the annual sugar production a tax of TEN CENTAVOS [P0. (c) To explore and expand the domestic and foreign markets for sugar and its by-products to assure mutual benefits to consumers and producers. operate.

On the other hand.78 but left unpaid balance of P48. 1954-1955 and 1955-1956. defendant Bacolod-Murcia Milling Co.. . 1951. Consequently. Through the testimony of Mr.. equipment. the proceeds thereof may be devoted only to the specific purpose for which the assessment was authorized.20. 1952-1953. are the following: x x x during the 5 crop years mentioned in the law.468. The facts of this case bearing relevance to the issue under consideration. or with any foreign government and. manufacture. Contending that the purchase of the Insular Sugar Refinery with money from the Philsugin Fund was not authorized by Republic Act 632 and that the continued operation of the said refinery was inimical to their interests. Cenon Flor Cruz. Subsection d) of Section 3 of Republic Act 632 authorizes Philsugin to buy and operate machineries. has paid P117. handling. or any state. presented by the defendants as witnesses.059. It is not a tax measure intended to raise revenues for the Government. acquired the Insular Sugar Refinery for a total consideration of P3. in general. authorized to purchase and operate a sugar refinery.909. as recited by the lower court and accepted by the appellants. defendant Ma-ao Sugar Central Co. transact all such business and perform such functions directly or indirectly necessary. x x x .897.44 but left unpaid balance of P235.60 payable. the Philippine Sugar Institute." Adverting to the finding of the lower court that proceeds of the said Fund had been used or applied to absorb the "tremendous losses" incurred by Philsugin in its "disastrous operation" of the said refinery.070. to exercise all the powers of a Corporation under the Corporation Law insofar as they are not inconsistent with the provisions of this Act. As such. territory. therefore. it was disclosed that on September 3.193. They maintained that their obligation to contribute or pay to the said Fund subsists only to the limit and extent that they are benefited by such contributions since Republic Act 632 is not a revenue measure but an Act which establishes a "Special assessments. to do everything directly or indirectly necessary or incidental to.43 but left unpaid balance of P208. has paid P267.. the lower court adjudged the appellants herein liable under the aforementioned law. it has been shown that the operation of the Insular Sugar Refinery has consumed 70% of the thinking time and effort of the PHILSUGIN management. the appellants refused to continue with their contributions to the said fund. or in furtherance of. and any other equipment and material for the production.00 but left an unpaid balance of P216. The appellants' thesis is simply to the effect that the "10 centavos per picul of sugar" authorized to be collected under Sec.070.74. incidental or conducive to the attainment of the purposes of the corporation. known as the PHILSUGIN for short. merchant vessels. 15 of Republic 632 is a special assessment. 7 and 8. Inc. (g) To do all such other things. or that the proceeds from the said assessment are being misapplied to the prejudice of those against whom it has been levied.. 1956 and 1957 was disastrous in the sense that PHILSUGIN incurred tremendous losses as shown by an examination of the statements of income and expenses marked Exhibits 5. on which there is no controversy. upon the following considerations: First. 1955. in 3 installments from the process of the sugar tax to be collected. 1954. Republic Act 632. Inc. the purposes of the corporation. From the evidence presented. 1953-1954.800.. under Republic Act 632. the appellants herein argue that they should not only be released from their obligation to pay the said assessment but be refunded.of the United States. defendant Talisay-Silay Milling Company has paid P251. once it has been determined that no benefit accrues or inures to the property owners paying the assessment. and defendant Central Azucarera del Danao made a payment of P49. etc.613. in accordance with the deed of sale Exhibit A. It was. 6. then the authority to insist on the payment of the said assessment ceases. transportation and warehousing of sugar and its by-products.812. and (h) Generally. of all that they might have previously paid thereunder. former acting general manager of PHILSUGIN and at present technical consultant of said entity. besides. There is no question regarding the correctness of the amounts paid and the amounts that remain unpaid.50. The evidence further discloses that the operation of the Insular Sugar Refinery for the years. namely 1951-1952. a special assessment being a levy upon property predicated on the doctrine that the property against which it is levied derives some special benefit from the improvement.77. or persons therefor.

" (Sec. while the refusal of a citizen to pay his ordinary taxes may not indeed be sanctioned because it would impair government functions. 1959. 470 (Assessment Law). The term "sugar central" could not have been intended by Congress to refer to all sugar mills or sugar factories as contended by respondent. The appellants deny that Philsugin is possessed of any such authority because what it is empowered to purchase is not a "sugar refinery but a central experiment station or perhaps at the most a sugar central to be used for that purpose. the appellants being members of the Philippine Sugar Association. Besides." or a sugar mill which manufactures sugar for a number of plantations. It is fallacious to argue that no mismanagement or abuse of corporate power could have been committed by Philsugin solely because its charter incorporates so many devices or safeguards to preclude such abuse. it would be dangerous to sanction the unilateral refusal of the appellants herein to continue with their contribution to the Fund for that conduct is no different "from the case of an ordinary taxpayer who refuses to pay his taxes on the ground that the money is being misappropriated by Government officials. L-12158. This reasoning of the lower court does not reconcile with that actually happened in this case. (Sec. in which this Court ruled that — We are of the opinion that a "sugar central. which must be presumed to have passed upon the legality and prudence of the disbursements of the Fund. Section 4 of said Act provides — "Machinery permanently used or in stalled in sugar centrals. It has not been shown that this particular provision was not observed in this case. That sugar mills are not the same as sugar centrals may also be gleaned from Commonwealth Act No. The issue. Act 632) For this distinction. the same would not hold true in the case of a refusal to comply with a special assessment.R. With all these safeguards against any imprudent or unauthorized expenditure of Philsugin Funds. applies to "a large mill that makes sugar out of the cane brought from a wide surrounding territory. the appellants cite the case of Collector vs. If respondent's interpretation is to be followed. mills. May 27. Rep. G. Thirdly." This clearly indicates that "Sugar centrals" are not the same as "sugar mills" or "sugar refineries. is whether Philsugin had any power or authority at all to acquire the said refinery. even sugar mills run by animal power (trapiche) would be considered sugar central. other offices of the Government review such transactions as reflected in the annual report obliged of the Philsugin to prepare." This is taking the law into their own hands. is to provide the Government with revenues needed for the financing of state affairs. Additionally." as that term is used in Section 189. In prescribing the principle governing valuation and assessment of real property. The appellants' refusal to continue paying the assessment under Republic Act 632 may not rightly be equated with a taxpayer's refusal to pay his ordinary taxes precisely because there is a substantial distinction between a "special assessment" and an ordinary tax. 4. 3[a]. Ledesma. . after all. The purpose of the former is to finance the improvement of particular properties. pay the assessment. Therefore. the appellants herein may not rightly claim that there had been a misapplication of the Philsugin funds when the same was used to procure the Insular Sugar Refinery because the decision to purchase the said refinery was made by a board in which the applicants were fully and duly represented. the corporate powers of the Philsugin are vested in and exercised by a board of directors composed of 5 members. the Administrator of Economic Coordination and the Presiding Officers of the two chambers of Congress. the acquisition of the Insular Sugar Refinery must be upheld in its legality and propriety. 3 of whom shall be appointed upon recommendation of the National Federation of Sugar Cane Planters and 2 upon recommendation of the Philippine Sugar Association. the appellants contend: First. Against the above ruling of the trial court. Thus. The purpose of an ordinary tax. with the benefits of the improvement accruing or inuring to the owners thereof who. No. Act 632).Secondly. We do not think Congress ever intended to place owners of (trapiches) in the same category as operators of sugar centrals. or refineries shall be assessed. Among those offices are the Office of the President of the Philippines. Fourthly." Second. Rep. on the other hand. rather. all financial transactions of the Philsugin are audited by the General Auditing Office. the appellants contend that the issue on hand is not whether Philsugin abused or not its powers when it purchased the Insular Sugar Refinery.

The nature of a "special assessment" similar to the case at bar has already been discussed and explained by this Court in the case of Lutz vs. 567 is a pure exercise of the taxing power. Ed. it was competent for the Legislature to find that the general welfare demanded that the sugar industry should be stabilized in turn. This Court can take judicial notice of the fact that sugar production is one of the great industries of our nation. 853. Johnson vs. 99 Fla. therefore redounds greatly to the general welfare.. vs. Mayo. 835. Baer. Kirkwood. Thus. Charleston Ry v. to enable it to resist the added strain of the increase in taxes that it had to sustain (Sligh vs.. 552.S. sugar occupying a leading position among its export products. otherwise known as the Sugar Adjustment Act. . levies on owners or persons in control of lands devoted to the cultivation of sugar cane and ceded to others for a consideration.S. that it gives employment to thousands of laborers in fields and factories. with reference to the citrus industry in Florida — "The protection of a large industry constituting one of the great source of the state's wealth and therefore directly or indirectly affecting the welfare of so great a portion of the population of the State is affected to such an extent by public interests as to be within the police power of the sovereign. the panels do not. 57).S. State ex rel. In other words. . to readjust the benefits derived from the sugar industry . the exaction of a special assessment would be "manifestly unfair" (Seattle vs. In other words. State ex rel. will show that the tax is levied with a regulatory purpose. For in this Lutz case. 59 L. 139 So. 121) As stated in Johnson vs. The plaintiff in the above case. not for a public purpose. in the case of Norwood vs." and therefore.. Marcy. on lease or otherwise — a tax equivalent to the difference between the money value of the rental or consideration collected and the amount representing 12 per centum of the assessed value of such land. 103 Fla. Commonwealth Act 567. 857). Kelleher 195 U. 241). 351) and "palpably arbitrary or plain abuse" (Gast Realty Investment Co. Upon a host of decisions of the United States Supreme Court. is one. in fact. and is thus pivotal in the plans of a regime committed to a policy of currency stability. the assessment is violative of the due process guarantee of the constitution (Memphis vs. this Court said: The basic defect in the plaintiff's position in his assumption that the tax provided for in Commonwealth Act No. 3). to limit the production of sugar to areas more economically suited to the production thereof. Pace. the act is primarily an exercise of the police power. so that all might continue profitably to engage therein. Walter Lutz. of the important sources to foreign exchange needed by our government." It then proceeds to enumerate the said purposes. unless a corresponding benefit is realized by the property owner. to be known as the 'Sugar Adjustment and Stabilization Fund. 237 U. Its promotion. the law-making body could provide that the distribution of benefits therefrom be readjusted among its components.' and shall be paid out only for any or all of the following purposes or to attain any or all of the following objectives. to provide means for the rehabilitation and stabilization of the threatened sugar industry. Commonwealth Act 567. 1311. Hence. 52. among which are "to place the sugar industry in a position to maintain itself.. vs. and in the wide field of its police power. all collections made thereunder "shall accrue to a special fund in the Philippine Treasury. We find for the appellee. protection and advancement." (128 So. 282 U. 128 So.1äwphï1. Analysis of the Act. the imposition or collection of a special assessment upon property owners who receive no benefit from such assessment amounts to a denial of due process. In rejecting the theory advanced by the said plaintiff. Marey.. and to afford laborers employed in the industry a living wage and to improve their living and working conditions. the principle underlying special assessments to meet the cost of public improvements is that the property upon which they are imposed is peculiarly benefited. pay anything in excess of what they received by reason of such improvement. the ruling was laid down that — As already indicated. 172 US 269. Araneta. and particularly Section 6. (Sec. 148. that it is a great source of the state's wealth.S. 240 U.ñët Under Section 6 of the said law. as may be provided by law. and therefore. Schneider Granite Co.Third. Marcy Inc. 98 Phil. contended that the aforementioned tax or special assessment was unconstitutional because it was being "levied for the aid and support of the sugar industry exclusively.

Grosjean. as it must that the protection and promotion of the sugar industry is a matter of public concern. 579). the Philsugin is authorized "to conduct research work for the sugar industry in all its phases. The view of the appellants herein. 1. with costs. nor the imposition of a special assessment. would be difficult to carry out save through the actual operation of a refinery. Here. no reason is seen why the state may not levy taxes to raise funds for their prosecution and attainment. it follows that the Legislature may determine within reasonable bounds what is necessary for its protection and expedient for its promotion. how can such an experiment be carried out without the tools. Maryland. 297 U. 316. that is. indeed." This provision. U. and achieve greater efficiency in the industry. from its financially unsuccessful venture. 301 U. If objective and methods are alike constitutionally valid. (Great Atl. It is.S. the legislative discretion must be allowed full play. The case dispute that the operation of a sugar refinery is a phase of sugar production and that from such operation may be learned methods of reducing the cost of sugar manufactured no less than it may afford the opportunity to discover the more effective means of achieving progress in the industry. but. We hold that the special assessment at bar may be considered as similarly as the above. therefore.Once it is conceded. Ed. On the authority of the above case. more than justifies the acquisition of the refinery in question. either agricultural or industrial. the most practical or realistic approach to the problem of what "practices or processes" might most effectively cut the cost of production is to experiment on production itself. 80 L. as other farms of a different nature may have been realized. M'cullock vs. an exercise of a sovereign power which no private citizen may lawfully resist. Butler. that they were not benefited by the unsuccessful operation of the refinery in question is not entirely accurate.. Quite obviously. then.. for the purpose of introducing into the sugar industry such practices or processes that will reduce the cost of production.S. 4 L. that the levy for the Philsugin Fund is not so much an exercise of the power of taxation. Taxation may be made the implement of the state's police power. . It could have understood more clearly the difficulties of marketing sugar products. 81 L. Ed. Republic of the Philippines Supreme Court Manila SECOND DIVISION . Tea Co. That the operation resulted in a financial loss is by no means an index that the industry did not profit therefrom. Section 2(a) specifies a field of research which. the exercise of the police power for the general welfare of the entire country. It could have known with better intimacy the precise area of the industry in need of the more help from the government. first of all. 1193. and it is not contended that the means provided in Section 6 of the law (above quoted) bear no relation to the objective pursued or are oppressive in character. the Philsugin could very well have advanced in its appreciation of the problems of management faced by sugar centrals. which is all that a refinery is? In view of all the foregoing. subject only to the test of reasonableness. vs. 412. under Section 2(a) of the charter. Ed. Thus. 4 Wheat. 477. therefore. & Pac. Besides. And yet. vs. the decision appealed from is hereby affirmed. Philsugin's experience alone of running a refinery is a gain to the entire industry. Furthermore.S..

. PUNO. represented G. JJ.. denying NTC's motion for reconsideration... in accordance with section 40(g) of the Public Service Act.. operate.00.. 2000..questioning the NTC's imposition against it of a permit fee of P1. the NTC approved the application for a provisional authority subject.. and maintain an internationaltelecommunications leased circuit service between the Philippines and other countries. No. .x DECISION GARCIA.... 7633 to operate domestic telecommunications.50 as a condition for the grant of the provisional authority applied for.. Present: Petitioner. holder of a legislative franchise under Republic Act (RA) No.. Respondent ICC filed a motion for partial reconsideration of the Order insofar as the same required the payment of a permit fee. filed with the NTC an application for a Certificate of Public Convenience and Necessity to install. through the National Telecommunications Commission (NTC)... SANDOVAL-GUTIERREZ.190. Chairperson.REPUBLIC OF THE PHILIPPINES..... There is no dispute as to the facts: On April 4. Promulgated: Respondent.R. and to charge rates therefor. 1996 and June 25. to the condition: 2. among others... 1996. setting aside the orders dated June 4.750.. ICC went to the CA on a petition for certiorari with prayer for a temporary restraining order and/or writ of preliminary injunction.... petitioner Republic.... .190. 1999 of the Court of Appeals (CA). In an Order[3] dated June 4. 141667 by NATIONAL TELECOMMUNICATIONS COMMISSION (NTC). In a subsequent Order dated June 25..-.versus .[4] as amended....750. AZCUNA. 1997 of the NTC insofar as said orders required respondent International Communications Corporation (ICC) to pay the amount of P1.. the NTC denied the motion.: In this petition for review under Rule 45 of the Rules of Court. respondent ICC.. J...190..750. seeks the annulment and setting aside of the Amended Decision[1] dated September 30..50 by way of permit fee as a condition for the grant of a provisional authority to operate an international telecommunications leased circuit service. J. Therefrom. 2006 x . 1997. July 17. and the Resolution[2] dated January 24. CORONA. with provisional authority for the purpose.. That applicant [ICC] shall pay a permit fee in the amount of P1.. and GARCIA. 1995. INTERNATIONAL COMMUNICATIONS CORPORATION (ICC)..

750. NTC's present recourse claiming that the CA erred in ruling that: 1. 7925. the CA. and 4. that the present petition should be dismissed outright for having been filed out of time.50) to the National Telecommunications Commission. 2. the Decision dated 29 January 1999 including the imposition by the public respondent of permit fees with respect to [ICCs] international leased circuit service is hereby REVERSED.190. In time.750. 2000.190. and accordingly denied ICC's certiorari petition. In view thereof. It is respondent's posture that petitioner's motion for reconsideration filed with the CA vis-a-vis the latter's Amended Decision is a pro forma motion and. requiring the payment of permit fees in the amount of One Million One Hundred Ninety Thousand Seven Hundred Fifty and 50/100 Pesos (P1. Judgment is hereby rendered. but its motion was denied by the CA in its equally challenged Resolution dated January 24. SO ORDERED. the instant petition is hereby DENIED. therefore.190.750. Petitioner NTC filed a motion for reconsideration. ACCORDINGLY. did not toll the running of the reglementary period to come to this Court via this petition for review. we shall first dwell on the procedural matter raised by respondent ICC. 1999. Accordingly.750. or of the denial of the petitioner's motion for new trial or reconsiderationfiled in due time after notice of the judgment.A. This time. The imposed permit fee in the amount of P1. SO ORDERED.50) by way of permit fees as a condition for the grant of a provisional authority to operate an International Leased Circuit Service. The imposition of permit fees is no longer authorized by R. thus: WHEREFORE. While a motion for reconsideration ordinarily tolls the period for appeal. are hereby AFFIRMED. the CA ruled in favor of the NTC whose challenged orders were sustained. 1999. one that fails to point out the findings or conclusions which were supposedly contrary to law or the evidence does not have such an effect on the reglementary period as it is merely a pro forma motion.[6] 3. the assailed orders dated 4 June 1996 and 25 June 1997. the instant Motion for Reconsideration is hereby GRANTED. Before addressing the issues raised. Hence. No costs.50 for respondent's provisional authority is exorbitant. to wit: WHEREFORE. insofar as they impose upon petitioner ICC the payment of the amount of One Million One Hundred Ninety Thousand Seven Hundred Fifty and Fifty Centavos (P1. Section 40(g) of the Public Service Act has been amended by Section 5(g) of R.190. ICC moved for a reconsideration. the International Communications Corporation is hereby ordered to pay the amount of One Million One Hundred Ninety Thousand Seven Hundred Fifty and 50/100 Pesos (P1. setting aside the questioned orders dated 04 June 1996 and 25 June 1997. NTC has arrogated upon itself the power to tax an entity. a recourse to this Court by way of a petition for review must be filed within fifteen (15) days from notice of the judgment or final order or resolution appealed from.A. in its Amended Decision dated September 30. (Word in bracket added).50) as a condition for the grant of a Provisional Authority to operate an International Circuit service.In its original decision[5] dated January 29. 7925.[7] . Under Section 2 of Rule 45 of the Rules of Court. namely. reversed itself.

by itself. 5. A tax is imposed under the taxing power of government principally for the purpose of raising revenues. the following fees as reimbursement of its expenses in the authorization. the consequence would be that after a decision is rendered. No. the installation of new units or authorizing the increase of capacity. or the extension of means or general extensions in the services.[9] Where there is no apparent intent to employ dilatory tactics. however. Section 40(g) of the Public Service Act provides: Sec. Section 40(g) of the Public Service Act is not a tax measure but a simple regulatory provision for the collection of fees imposed pursuant to the exercise of the States police power. authorizing the increase in equipment. courts should be slow in declaring outright a motion for reconsideration as pro forma. All the more so given that the instant petition raises some arguments that are well-worth resolving for future reference. There can be no doubt then that petitioner NTC is authorized to collect such fees. 40. This brings us to the substantive merits of the petition. twenty centavos for each one hundred pesos or fraction of the additional capital necessary to carry out the permit. supervision and/or regulation of public services. Under established jurisprudence. the movant has to dwell of necessity on issues already passed upon. rather than to abort the appeal due to a technicality.Petitioner disagreed. Responsibilities of the National Telecommunications Commission. . 7925.[10] Petitioner NTC also assails the CA's ruling that Section 40(g) of the Public Service Act had been amended by Section 5(g) of R. Respondent contends that the issues raised by the petitioner in its motion for reconsideration were mere reiterations of the same issues which had already been considered and passed upon by the CA when it promulgated its Amended Decision. whichreads: Sec. which it is not authorized to do. the CA ruled that petitioner NTC had arrogated upon itself the power to tax an entity. the mere fact that a motion for reconsideration reiterates issues already passed upon by the court does not. but is merely a regulatory measure. (Emphasis supplied) Clearly. If a motion for reconsideration may not discuss those issues. In its Amended Decision. the amount thereof must be reasonably related to the cost of such supervision and/or regulation. contending the fee in question is not in the nature of a tax. make it a pro forma motion. The Commission is authorized and ordered to charge and collect from any public service or applicant. respondent ICC claims that the motion for reconsideration filed by petitioner NTC in connection with the CAs Amended Decision failed to point out specifically the findings or conclusions of the CA which were supposedly contrary to law. respondent maintains that petitioners aforementioned motion for reconsideration is a mere pro forma motion that did not toll the period for filing the present petition. The law in question. supervision and/or regulation of the public services: xxx xxx xxx g) For each permit. the losing party would be confined to filing only motions for reopening and new trial. However. merely authorizes and requires the collection of fees for the reimbursement of the Commission's expenses in the authorization. especially where.The National Telecommunications Commission (Commission) shall be the principal administrator of this Act and as such shall take the necessary measures to implement the policies and objectives set . and in so doing.In arguing for the outright dismissal of this petition. as the case may be. On this premise. The doctrine relating to pro forma motions has a direct bearing upon the movant's valuable right to appeal. as here. contrary to the law or evidence. it would still be in the interest of justice to review the Amended Decision a quo on the merits.A.[8] Among the ends to which a motion for reconsideration is addressed is precisely to convince the court that its ruling is erroneous and improper. if petitioner's motion for reconsideration was indeed pro forma. the industry involved (telecommunications) is vested with public interest. Hence.

allowed NTC to impose fees asreimbursement of its expenses related to. and must go hand-in-hand with one another. 7925 did not bring with it the abolition of permit fees. It is this policy the Court will apply in arriving at the interpretation of the laws and the conclusions that should follow therefrom. Such alacrity should be avoided. We find. and Section 5(g) of R. [15] Hence. the words authorization. An implied repeal will not be allowed unless it is convincingly andunambiguously demonstrated that the two laws are so clearly repugnant and patently inconsistent with each other that they cannot co-exist. of the Public Service Act. supervision and/or regulation used in Section 40(g) of the Public Service Act are not distinct and completely separable concepts which may be taken singly or piecemeal. supervises and regulates telecommunications entities and these functions. as amended. among other things. and so give effect to both while at the same time also according due respect to a coordinate department of the government. as amended). the Commission shall be responsible for the following: xxx xxx xxx g) In the exercise of its regulatory powers. 7925.A. This necessarily implies. a subsequent law cannot be construed as repealing a prior one unless an irreconcilable inconsistency and repugnancy exist in the terms of the new and old laws. bearing in mind that they are equally the handiwork of the same legislature. supra. when confronted with apparently conflicting statutes or provisions. In fact.. The absence alone of the word authorization in Section 5(g) of R. As pointed out by thepetitioner. as amended. Section 40(g).. 7921 of the word authorization found in Section 40(g) of the Public Service Act. that NTC is correct in saying that there is no showing of legislative intent to repeal.[14] Here. No. In petitioner's own words. In the absence of an express repeal.[12] Courts of justice. and not taxes. of necessity.A. continue to impose such fees and charges as may be necessary to cover reasonable costs and expenses for the regulation and supervision of the operations of telecommunications entities.[13] It is a rule of statutory construction that repeals by implication are not favored. while petitioner had made some valid points of argument. An implied repeal is predicated on a substantial conflict between the new and prior laws. meant that the fees which NTC may impose are only for reimbursement of its expenses for regulation and supervision but no longer for authorization purposes. Their function is to try to harmonize. even impliedly. the authorization of public services. Petitioner itself admits that the fees imposed are precisely regulatory and supervision fees. crumble on the fourth issue raised in its petition. forth in this Act. The wise policy is for the judge to harmonize such statutes or provisions if this is possible. the latter provision directs petitioner NTC to continue to impose such fees and charges as may be necessary to cover reasonable costs and expenses for the regulation and supervision of telecommunications entities. No. that such fees must be commensurate to the costs and expenses involved in discharging its supervisory and regulatory functions. the omission by Section 5(g) of R. the fees and charges which petitioner NTC is authorized to collect from any public service or applicant are limited to the reimbursement of its expenses in . cannot be considered singly without destroying the whole concept of the Commission's regulatory functions. In the words of Section 40(g) of the Public Service Act itself. 7921 cannot be construed to mean that petitioner NTC had thus been deprived of the power to collect such fees. Courts cannot take the place of Congress in repealing statutes. above.[11] The two laws must be absolutely incompatible such that they cannot be made to stand together. To the CA. its position must. should endeavor to reconcile the same instead of declaring outright the validity of one as against the other. seeming conflicts in the laws and resolve doubts in favor of their validity and co-existence. [t]he Commission authorizes. as much as possible. however. petitioner NTC is correct in asserting that the passage of R.A. Taken in their entirety. of R. they are the quintessence of the Commission's regulatory functions.No. Section 5(g). This is based on the rationale that the will of the legislature cannot be overturned by the judicial function of construction and interpretation. supra.A. 7921 no longer speaks of authorization but only of regulation and supervision. there does not even appear to be a conflict between Section 40(g) of the Public Service Act. as amended.A. However. Accordingly. however. in addition to its existing functions. (Emphasis supplied) The CA ratiocinated that while Section 40(g) of the Public Service Act (CA 146.

to wit: Section 23. In this connection. it is significant to note that the subsequent congressional franchise granted to the Domestic Satellite Corporation under Presidential Decree No. exemption. charges. It is difficult tocomprehend how the cost of licensing. Such tax shall be due and payable annually within ten days after the audit and approval of the accounts by the Commission on Audit as prescribed in Section 11 hereof and shall be in lieu of all taxes. Petitioner itself admits that it had imposed the maximum amount possible under the Public Service Act.A.Any advantage. established or collected by any municipal.R. Carpio Morales. Present: Panganiban.750. JJ CENTRAL LUZON DRUG Promulgated: CORPORATION. states: Section 6.50. . Independent of the above.Corona. That is hardly taking into consideration the actual costs of fulfilling its regulatory and supervisory functions. or description levied. considered as ipso facto part of ICC's franchise due to the parity clauseembodied in Section 23 of R. respondent ICC cannot be made subject to the payment of the subject fees because itspayment of the franchise tax is in lieu of all other taxes and fees. Petitioner. Sandoval-Gutierrez. favor. Respondent. fees.50 fee is that respondent ICC is entitled to the benefits of the so- called parity clause embodied in Section 23 of R. 2005 . supervision and/or regulation of public services. WHEREFORE. 159647 REVENUE. J. In consideration of the franchise and rights hereby granted. Equality of Treatment in the Telecommunications Industry.versus . Accordingly. We refer to the fact that. or immunity granted under existing franchises.A. 7925. No. or national authority x x x (Emphasis supplied) The CA was correct in ruling that the above-quoted provision is. 947.. privilege. and Garcia. THIRD DIVISION COMMISSIONER OF INTERNAL G. regulating.the authorization. as amended. by law. SO ORDERED. . 7925. and surveillance could amount to P1.190. the principal ground given by the CA in striking down the imposition of the P1. April 15. shall ipso facto become part of previously granted telecommunications franchises and shall be accorded immediately and unconditionally to the grantees of such franchises x x x. the grantee shall pay to the Republic of the Philippines during the life of this franchise a tax of one-half percent of gross earnings derived by the grantee from its operation under this franchise and which originate from the Philippines. provincial. about which petitioner NTC did not bother to comment at all. The CA was correct in finding the amount imposed as permit fee exorbitant and in complete disregard of the basic limitation that the fee should be at least approximately commensurate to the expense.190. No. as respondent ICC aptly observed. there is one basic consideration for the dismissal of this petition. nature.750. the petition is hereby DENIED and the assailed Amended Decision and Resolution of the CA are AFFIRMED. or may hereafter be granted. No. Chairman. assessments. or levies of any kind.

x -. respondent filed its Annual Income Tax Return for taxable year 1996 declaring therein that it incurred net losses from its operations.00 allegedly arising from the 20% sales discount granted by respondent to qualified senior citizens in compliance with [R. the Resolution appealed from is AFFIRMED in toto. The Case Before us is a Petition for Review[1] under Rule 45 of the Rules of Court. On April 15.-.-.x DECISION PANGANIBAN. 2003 Resolution[3] of the Court of Appeals (CA) in CA-GR SP No.769.: T he 20 percent discount required by the law to be given to senior citizens is a tax credit.-. Basic is the rule that administrative regulations cannot amend or revoke the law.-. Unable to obtain affirmative response from petitioner. 67439. A tax credit is used by a private establishment only after the tax has been computed.-. the Tax Court rendered a Decision[5] dismissing respondents Petition for lack of merit.-.A. From January to December 1996.-. For the said period. not merely a tax deduction from the gross income or gross sale of the establishment concerned. 2002 Decision[2] and the August 11.00. seeking to set aside the August 29.-. respondent granted twenty (20%) percent sales discount to qualified senior citizens on their purchases of medicines pursuant to Republic Act No.-.-.-. 1998. 2001.-.769. the [CTA] justified its ruling with the following ratiocination: . In said decision. Thus.-.A.-.-.-. it operated six (6) drugstores under the business name and style Mercury Drug. RA 7432 unconditionally grants a tax credit to all covered entities. On February 12. The Facts The CA narrated the antecedent facts as follows: Respondent is a domestic corporation primarily engaged in retailing of medicines and other pharmaceutical products. the provisions of the revenue regulation that withdraw or modify such grant are void.] 7432. In 1996. [R.-.-. 1997.-.-.-.-. The assailed Decision reads as follows: WHEREFORE. respondent filed with petitioner a claim for tax refund/credit in the amount of P904. a tax deduction.-. respondent elevated its claim to the Court of Tax Appeals [(CTA or Tax Court)] via a Petition for Review.-. J. No costs. premises considered.[4] The assailed Resolution denied petitioners Motion for Reconsideration.-.] 7432 and its Implementing Rules and Regulations. On January 16.-. before the tax is computed. the amount allegedly representing the 20% sales discount granted by respondent to qualified senior citizens totaled P904.-.

We take exception to the CTAs sweeping but unfounded statement that both tax refund and tax credit are modes of recovering taxes which are either erroneously or illegally paid to the government.a)] of R. x x x. The standards and mechanics for the grant of a refund or credit under these situations are different from that under Sec.39. 229 clearly does not apply in the instant case because the tax sought to be refunded or credited by petitioner was not erroneously paid or illegally collected. such credit is not tantamount to an unintended benefit from the law. x x x. Moreover. [6] granted respondents motion for reconsideration and ordered herein petitioner to issue a Tax Credit Certificate in favor of respondent citing the decision of the then Special Fourth Division of [the CA] in CA G. but rather a just compensation for the taking of private property for public use. The [CTA]. x x x. Commissioner of Internal Revenue promulgated on May 31. in its assailed resolution. Hence this Petition. Whether the Court of Appeals erred in holding that respondent is entitled to a refund. Moreover. or that of excise tax paid on goods locally produced or manufactured but actually exported. whether the recovery of the tax is made by means of a claim for refund or tax credit. 4[. or that of excess input tax paid by a VAT-registered person. such as the refund of excess estimated corporate quarterly income tax paid. It reasoned that Republic Act No. Tax refunds or credits do not exclusively pertain to illegally collected or erroneously paid taxes as they may be other circumstances where a refund is warranted. Respondent lodged a Motion for Reconsideration. if there is no tax liability.R. erroneously or illegally. if no tax has been paid to the government. The tax refund provided under Section 229 deals exclusively with illegally collected or erroneously paid taxes but there are other possible situations. 229. In other words. 60057 entitled Central [Luzon] Drug Corporation vs. (RA) 7432 required neither a tax liability nor a payment of taxes by private establishments prior to the availment of a tax credit. it could logically be deduced that tax credit is premised on the existence of tax liability on the part of taxpayer. tax refund or tax credit is unavailing.[8] The Issues Petitioner raises the following issues for our consideration: Whether the Court of Appeals erred in holding that respondent may claim the 20% sales discount as a tax credit instead of as a deduction from gross income or gross sales. 7432. before recovery is allowed[. tax credit is not available.[9] . SP No.038.A. Sec. xxxxxxxxx Prescinding from the above. to wit: However. is yet another instance of a tax credit and it does not in any way refer to illegally collected or erroneously paid taxes. or if no amount is due and collectible from the taxpayer.[7] Ruling of the Court of Appeals The CA affirmed in toto the Resolution of the Court of Tax Appeals (CTA) ordering petitioner to issue a tax credit certificate in favor of respondent in the reduced amount of P903. 2001. Sec.] it must be first established that there was an actual collection and receipt by the government of the tax sought to be recovered.

defined as a subtraction from income for tax purposes. there ought to be a tax liability before the tax credit can be applied. There will be no reason for deducting the latter when there is. as will be presented shortly.the income tax that is determined after applying the corresponding tax rates to taxable income. a tax deduction. even though an establishment operates at a loss? We answer in the affirmative. without which it does not have any use. reduces the income that is subject to tax [22] in order to arrive at taxable income. the availment or use is not. In the meantime. payments of estimated tax. if not entirely confuse. One of these is tax deduction -. before. a tax credit reduces the tax due. [19] An example of a tax deduction is any of the allowable deductions enumerated in Section 34[20] of the Tax Code. and investment tax credits. [13] tax credit generally refers to an amount that is subtracted directly from ones total tax liability.[24] For the establishment to choose the immediate availment of a tax credit will be premature and impracticable. Although this tax credit benefit is available. However. no existing obligation to the government. despite incurring a net loss. Nevertheless. any tax credit application will be useless. But it breathes. Congress has granted without conditions a tax credit benefit to all covered establishments. Tax Liability Required for Tax Credit Since a tax credit is used to reduce directly the tax that is due. tax liability. since there is no tax liability that calls for its application. Examples of tax credits are withheld taxes.[17] Tax credit should be understood in relation to other tax concepts.[18] or an amount that is allowed by law to reduce income prior to [the] application of the tax rate to compute the amount of tax which is due. A tax credit is used only after the tax has been computed. including -- whenever applicable -. [14] It is an allowance against the tax itself [15] or a deduction from what is owed[16] by a taxpayer to the government.[12] But can such credit be claimed. the existence of a tax credit or its grant by law is not the same as the availment or use of such credit.These two issues may be summed up in only one: whether respondent.[21] A tax deduction. [11] The latter may then claim the cost of the discount as a tax credit. Sole Issue: Claim of 20 Percent Sales Discount as Tax Credit Despite Net Loss Section 4a) of RA 7432[10] grants to senior citizens the privilege of obtaining a 20 percent discount on their purchase of medicine from any private establishment in the country. Without that liability. it need not be used by losing ventures. . Tax Credit versus Tax Deduction Although the term is not specifically defined in our Tax Code. not a present. While the grant is mandatory. and no other taxes are currently due from. to begin with. on the other. A tax credit differs from a tax deduction. The Courts Ruling The Petition is not meritorious. By its nature. the issue. under RA 7432. On the one hand. If a net loss is reported by. it need not move. simply because no reduction of taxes can instantly be effected. there will obviously be no tax liability against which any tax credit can be applied. a business establishment.[23] To think of the former as the latter is to avoid. the tax credit may still be deducted from a future. the irrefutable fact remains that. Neither can it be reduced to nil by the quick yet callow stroke of an administrative pen. may still claim the 20 percent sales discount as a tax credit.

either in the processing of sardines. even if not made to our government. the tax to be foregone or spared.is also allowed a tax credit that includes a ratable portion of any input tax not directly attributable to either activity. a VAT (Value-Added Tax). Indeed. The tax credits in both instances allude to the prior payment of taxes. or the transitional input tax determined in accordance with Section 111(A).then later prorated. neither a tax liability nor a prior tax payment is needed. when such amount -. for the existence or grant solely of such credit.again not necessarily paid to -. this provision actually refers to the tax credit as a condition only for the imposition of a lower tax rate. to the extent that the input taxes have not been applied against output taxes. In addition to the above-cited provisions in the Tax Code. a one and a half percent input tax credit that is merely presumptive is allowed. [27] Although true. Section 86(E) allows a tax credit -. It may be argued that Section 28(B)(5)(b) of the Tax Code is another illustration of a tax credit allowed. This input tax may either be the VAT on the purchase or importation of goods or services that is merely due from -. In Section 111(B).whether or not subject to the VAT -. categorically allows as credits. not as a deduction from the corresponding tax liability. Section 34(C)(5) provides that for such taxes incurred but not paid. Besides.[26] Where a taxpayer is engaged in zero-rated or effectively zero-rated sales and also in taxable or exempt sales. the amount of income taxes merely incurred -.such VAT-registered person in the course of trade or business.registered person engaging in transactions -. in such sum as may be required. materials and supplies. again. or in the manufacture of refined sugar and cooking oil -. in computing the estate tax due. there are also tax treaties and special laws that grant or allow tax credits. Under Section 110. Section 34(C)(3). a tax credit may be allowed. even though no prior tax payments have been made.as computed -. even though no taxes have been previously paid.Prior Tax Payments Not Required for Tax Credit While a tax liability is essential to the availment or use of any tax credit. under Section 112(A). No tax is actually paid prior to the availment of such credit.in computing for the donors tax due. Specifically.as well as the one earlier mentioned -. against the income tax imposable under Title II.shows that the prior payment of taxes is not a requisite. a VAT-registered person whose sales are zero-rated or effectively zero-rated may. it is not our government but the domiciliary country that credits against the income tax payable to the latter by the foreign corporation.again when paid to a foreign country -. subject to the condition precedent that the taxpayer shall simply give a bond with sureties satisfactory to and approved by petitioner. For example.is higher than the actual VAT paid on the said items.the government and attributable to such sales.not necessarily paid by -. and further conditioned upon payment by the taxpayer of any tax found due. the tax credit refers to an input tax that is either due only or given a value by mere comparison with the VAT actually paid -. in this provision.[25] Clearly from this provision.and for the contract price of public work contracts entered into with the government. The Tax Code is in fact replete with provisions granting or allowing tax credits. Moreover. mackerel and milk. no prior tax payments are needed for the use of the tax credit. On the contrary. For the purchase of primary agricultural products used as inputs -. .for estate taxes paid to a foreign country. even though no prior tax payments are not required. apply for the issuance of a tax credit certificate for the amount of creditable input taxes merely due -. Also found in Section 101(C) is a similar provision for donors taxes -. this provision -. the amount of creditable input taxes due that are not directly and entirely attributable to any one of these transactions shall be proportionately allocated on the basis of the volume of sales. in relation to Section 34(C)(7)(b). More important. upon petitioners redetermination of it.subject to certain limitations -. prior tax payments are not. in availing of such tax credit for VAT purposes.[28] In contrast. The latter type may in fact be an amount equivalent to only eight percent of the value of a VAT-registered persons beginning inventory of goods.not necessarily paid -.by a domestic corporation during a taxable year in any foreign country. the imposition of a final withholding tax rate on cash and/or property dividends received by a nonresident foreign corporation from a domestic corporation is subjected to the condition that a foreign tax credit will be given by the domiciliary country in an amount equivalent to taxes that are merely deemed paid.

for the losing establishment to immediately apply such credit. and the prices at which . especially a price. it may be expressed in such terms as 5/10. the most common of which is that affecting the income statement[39] or financial report upon which the income tax is based. [37] or a reduction from the full amount or value of something. provide the procedures for its availment.[40] It is a reduction in price offered to the purchaser if payment is made within a shorter period of time than the maximum time specified. will be an improvident usance. did not necessitate the existence of a tax liability. First. therefore. To illustrate. include tax credits equivalent to either five percent of the net value earned. it is evident that prior tax payments are not indispensable to the availment of a tax credit. of a tax credit. Thus. [33] In turn. but the tax paid in the former is merely allowed as a credit against the tax levied in the latter.[43] It is also called a volume or bulk discount. Regarding this matter. No entry for it need be made in the manual or computerized books of accounts.i and 4 of Revenue Regulations No. issued pursuant thereto. [29] Apparently. since the purchase or sale is already valued at the net price actually charged the buyer. Both are entitled to the tax credit provided for under RA 7432. or five or ten percent of the net local content of exports. the manner by which the discount shall be credited against taxes has not been clarified by the revenue regulations. the definition given by petitioner is erroneous. no prior tax payments are necessary. Sections 2. however. n/30.[41] Also referred to as a sales discount on the part of the seller and a purchase discount on the part of the buyer. where no tax is due. However. income that is taxed in the state of source is also taxable in the state of residence. payment is made to the state of source. Business Discounts Deducted from Gross Sales A cash discount. By ordinary acceptation.Under the treaties in which the tax credit method is used as a relief to avoid double taxation. is a reduction in price allowed for purchases made in large quantities. despite the plain mandate of the law and the regulations carrying out that mandate.[44] A percentage reduction from the list price x x x allowed by manufacturers to wholesalers and by wholesalers to retailers[45] is known as a trade discount. the incentives provided for in Article 48 of Presidential Decree No. there can also be tax credit incentives. we do not agree with its finding[32] that the carry- over of tax credits under the said special law to succeeding taxable periods. has been previously paid to the latter.[34] To deny such credit. Under special laws that particularly affect businesses.[30] In order to avail of such credits under the said law and still achieve its objectives. the Implementing Rules and Regulations. (PD) 1789. a discount is an abatement or reduction made from the gross amount or value of anything. shipping.[42] A quantity discount. a private establishment reporting a net loss in its financial statements is no different from another that presents a net income. the CA correctly held that the availment under RA 7432 did not require prior tax payments by private establishments concerned.[31] However. No tax. (BP) 391. and even their application against internal revenue taxes. [35] In ordinary business language. However. and handling. The examples above show that a tax liability is certainly important in the availment or use. It refers to tax credit as the amount representing the 20 percent discount that shall be deducted by the said establishments from their gross income for income tax purposes and from their gross sales for value-added tax or other percentage tax purposes. it is in business parlance a deduction or lowering of an amount of money. not the state of residence. since the law itself accords that unconditional benefit. as amended by Batas Pambansa Blg. From all the foregoing instances. is indefensible. not the existence or grant. justified by savings in packaging. is one granted by business establishments to credit customers for their prompt payment. 2-94 Erroneous RA 7432 specifically allows private establishments to claim as tax credit the amount of discounts they grant.[36] To be more precise.[46] The purpose for the discount is to encourage trading or increase sales. [38] In business there are many kinds of discount. the tax credit represents the amount of such discount. for example.

because it is simple.known as the gross method -. Applying generally accepted accounting principles (GAAP) in the country. the latter is a deduction after. [60] It is. we ought not to distinguish. volume or bulk discounts -.are recorded in the manual and computerized books of accounts and reflected in the financial statements at the gross amounts of the invoices. While the former is a deduction before. these two provisions affirm that sales discounts are amounts that are always deductible from gross sales. Reason for the Senior Citizen Discount: The Law. -. the effect of a sales discount on the income statement and income tax return of an establishment covered by RA 7432 is different from that resulting from the availment or use of its tax credit benefit.immediately upon perfection of the sale. The term sales discounts is not expressly defined in the Tax Code. the tax credit benefit is not the same as a sales discount. To repeat from our earlier discourse. the monetary effect of the privilege may be the same as that resulting from a sales discount. we find that the nature of a sales discount is peculiar. the discount period lasts no more than a day. the income tax is computed.[53] However. not a sales discount or any of the above discounts in particular. As mentioned earlier. What RA 7432 grants the senior citizen is a mere discount privilege. under the revenue regulations promulgated by our tax authorities.and the net amount thereof collected -. this benefit cannot and should not be treated as a tax deduction. a discount is not necessarily a sales discount. the real and compelling reason for the private establishment giving the discount is that the law itself makes it mandatory. and produces no material errors over time. [49] This role usually involves warehousing or advertising. net of the said discounts. Based on this discussion. chain or functional discounts.from gross sales to arrive at net sales. .may be excluded from the gross sales within the same quarter they were given. In other words. therefore. [61] Although prompt payment is made for an arms-length transaction by the senior citizen. allowances and cost of goods sold[56] -.along with sales returns.along with returns. Prompt payment is not the reason for (although a necessary consequence of) such grant. the privilege enjoyed by the senior citizen must be equivalent to the tax credit benefit enjoyed by the private establishment granting the discount. expected that for each retail sale made under this law.the purchased goods may be resold are also suggested. Yet. A separate line item cannot be shown. Ubi lex non distinguit. akin to a trade discount is a functional discount. rebates and other similar expenses -. However. [55] because the transactions themselves involving both accounts receivable and sales have already been entered into. allowances.is deducted from gross sales to come up with the gross income.a series of discounts from one list price -.as well as from quantity. only the net amounts of the invoices -. sales discounts that are granted and indicated in the invoices at the time of sale -. It is a suppliers price discount given to a purchaser based on the [latters] role in the [formers] distribution system. To stress. Where the law does not distinguish. the effect is different from a simple reduction in price that results from such discount. nec nos distinguere debemus. To be sure. Not Prompt Payment A distinguishing feature of the implementing rules of RA 7432 is the private establishments outright deduction of the discount from the invoice price of the medicine sold to the senior citizen.[48] Finally.is recorded at net.is most widely used. but one provision adverts to amounts whose sum -. this type of discount is reflected in the income statement[50] as a line item deducted -. [47] Even a chain discount -. the latter provision also appears as a suitable reference point for income tax purposes already embraced in the former. profit or margin[57] derived from business.after the discounts have been deducted -. After all.[59]While determinative only of the VAT.[58] In another provision therein. To a senior citizen.are recorded in the books of accounts[54] and reflected in the financial statements. this benefit has been erroneously likened and confined to a sales discount. under the net method used in recording trade. because such discount is given -. because the accounts receivable and sales figures that arise from sales discounts. to a private establishment.[52] This manner of recording credit sales -. more convenient to apply than the net method.and that do not depend upon the happening of any future event -.[51] This type of presentation is resorted to. and a tax credit for a simple discount privilege should not be automatically treated like a sales discount.

Respondent is given two options -. thus compelling it to close shop.shall be treated as a reduction from any tax liability.which is not even identical to the discount privilege that is granted by law -. a regulation that operates to create a rule out of harmony with the statute is a mere nullity.[66] Courts. considering that the latter has to be deducted from gross sales in order to compute the gross income in the income statement and cannot be deducted again. (RR) 2-94 define tax credit as the 20 percent discount deductible from gross income for income tax purposes. it may even ignore the credit and simply consider the gesture as an act of beneficence. In fact.[70] Availment of Tax Credit Voluntary Third. What Section 4. not a sales discount. it cannot engraft additional requirements not contemplated by the legislature.[62] it cannot prevail. but also to blatantly contravene the law itself. If there is none. therefore. the tax authorities have given the term tax credit in Sections 2.[72] There is no absolute right conferred upon respondent.Sections 2. the credit cannot be used and will just have to be carried over and revalidated[75] accordingly. or any similar taxpayer.[68] A regulation adopted pursuant to law is law. [73] For the tax authorities to compel respondent to deduct the 20 percent discount from either its gross income or its gross sales[74] is. therefore. who are certain that these will be followed by the courts. neither does it impose a duty on the part of the government to sit back and allow an important facet of tax collection to be at the sole control and discretion of the taxpayer. however. . even for purposes of computing the income tax.either to claim or not to claim the cost of the discounts as a tax credit. Laws Not Amended by Regulations Second. plain and simple. the law cannot be amended by a mere regulation.[67] In case of conflict. be stricken down. [64] Our tax authorities fill in the details that Congress may not have the opportunity or competence to provide.i and 4 of Revenue Regulations No. however. This contrived definition is improper. not imperative. to avail itself of the tax credit remedy whenever it chooses. The administrative agency issuing these regulations may not enlarge. the word may in the text of the statute[71] implies that the availability of the tax credit benefit is neither unrestricted nor mandatory. alter or restrict the provisions of the law it administers. erroneous or improper. the law must prevail. When the law says that the cost of the discount may be claimed as a tax credit. Their interpretation has muddled up the intent of Congress in granting a mere discount privilege. an expression of its social conscience. In effect. the business continues to operate at a loss and no other taxes are due. a regulation or any portion thereof not adopted pursuant to law is no law and has neither the force nor the effect of law.i and 4 of RR 2-94 a meaning utterly in contrast to what RA 7432 provides. [63] In the scheme of judicial tax administration. but to limit the benefit to a sales discount -. Granting that there is a tax liability and respondent claims such cost as a tax credit. it means that the amount -- when claimed -. not only to make an imposition without basis in law. If. [65] The regulations these authorities issue are relied upon by taxpayers. In fact. the tax credit benefit under RA 7432 is related to a sales discount.a of RA 7432 means is that the tax credit benefit is merely permissive. It is a cardinal rule that courts will and should respect the contemporaneous construction placed upon a statute by the executive officers whose duty it is to enforce it x x x. The option to avail of the tax credit benefit depends upon the existence of a tax liability. In the present case. or from gross sales for VAT or other percentage tax purposes.[69] Conversely. then the tax credit can easily be applied. The definition must. the credit can never be applied and will be lost altogether. will not uphold these authorities interpretations when clearly absurd.does not define it at all and serves no useful purpose. the need for certainty and predictability in the implementation of tax laws is crucial.

The discounts given would have entered the coffers and formed part of the gross sales of the private establishments concerned.[77] The concept of public use is no longer confined to the traditional notion of use by the public. Sections 2. but also to the promptness in its release. .[84] For this reason. Aside from the observation we have already raised earlier. it is the existence or the lack of a tax liability that determines whether the cost of the discounts can be used as a tax credit. In effect. Equivalent to the payment of property taken by the State. Accordingly. and if all its sales come from retail purchases by senior citizens. and the equitable distribution of wealth. public welfare. it will also be grossly unfair to an establishment if the discounts will be treated merely as deductions from either its gross income or its gross sales. Where the words of a statute are clear.[82] In recent years. such issuance -. This term refers not only to the issuance of a tax credit certificate indicating the correct amount of the discounts given. Operating at a loss through no fault of its own. [88] Sections 2. To put it differently. through the certificate. it must be given its literal meaning and applied without attempted interpretation. social justice cannot be invoked to trample on the rights of property owners who under our Constitution and laws are also entitled to protection. Grant of Tax Credit Intended by the Legislature Fifth. respondent is made to suffer the consequences of being immediately deprived of its revenues while awaiting actual receipt. because no taxes are due from the latter. a just compensation for income that is taken away from respondent becomes necessary. respondent becomes entitled to a just compensation. The same effect is expected if its mark-up is less than 20 percent.when not done within a reasonable time from the grant of the discounts -. The plain meaning rule or verba legis in statutory construction is thus applicable x x x. the power to tax has indeed become a most effective tool to realize social justice. RA 7432 itself seeks to adopt measures whereby senior citizens are assisted by the community as a whole and to establish a program beneficial to them. Neither does it allow our tax administrators to expand or contract the legislative mandate. but held synonymous with public interest. The social justice consecrated in our [C]onstitution [is] not intended to take away rights from a person and give them to another who is not entitled thereto. contradict these constitutional policies and statutory objectives. RA 7432 does not give respondent the unfettered right to avail itself of the credit whenever it pleases. public welfare.[76] Tax Credit Benefit Deemed Just Compensation Fourth. but rather from the private establishments concerned.[80] Tax measures are but enforced contributions exacted on pain of penal sanctions [81] and clearly imposed for a public purpose. plain and free from ambiguity. and no administrative body can alter that fact. Be it stressed that the privilege enjoyed by senior citizens does not come directly from the State. were it not for RA 7432. it will realize that the tax credit limitation under RR 2-94 is inutile.[83] While it is a declared commitment under Section 1 of RA 7432.i and 4 of RR 2-94. As a result of the 20 percent discount imposed by RA 7432. if not improper.In other words.will surely start to incur losses because of such discounts.public benefit.[78] The discount privilege to which our senior citizens are entitled is actually a benefit enjoyed by the general public to which these citizens belong. however. a private establishment that merely breaks even[85] -.[79] Besides. profit- generating businesses will be put in a better position if they avail themselves of tax credits denied those that are losing.without the discounts yet -.cannot be considered as just compensation. the taxation power can also be used as an implement for the exercise of the power of eminent domain. the tax creditbenefit granted to these establishments can be deemed as their just compensation for private property taken by the State for public use. and public convenience. [86] These objectives are consonant with the constitutional policy of making health x x x services available to all the people at affordable cost [87] and of giving priority for the needs of the x x x elderly. of the equivalent amount it needs to cope with the reduction in its revenues.i and 4 of RR 2-94 deny the exercise by the State of its power of eminent domain. It is in the tax credit that our legislators find support to realize social justice. Worse. The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of private property for public use or benefit.

on the responsibility of the private hospitals and drugstores. tax credit. (inaudible/did not use the microphone). Restaurant lodging houses. Unico) Ah. (Rep. Yung ang proposal ni Senator Shahani. Hospitals ba o lahat ng establishments na covered. we'll say the grant of 20% discount from all establishments et cetera. Yung isiningit natin? MS. Kaya lang po sir. REP. so. Congress has allowed all private establishments a simple tax credit. I think we incorporated there a provision na . disclose the true intent of our legislators to treat the sales discounts as a tax credit. ADVENTO. SEN. THE CHAIRMAN. recreation centers. To capture that thought. Unico). In the case of private hospitals they got the grant of 15% discount. I think we have to put in also a provision here about the deductions from taxable income of that private hospitals. 1992 of the Bicameral Conference Committee Meeting on Social Justice. Unico). Ano ba yung establishments na covered? SEN. From all establishments. SEN. and mga discounts po nila affecting government and public institutions. Letter A. AQUINO. ANGARA. By the way. Sa kuwan lang yon. You want to insert that? THE CHAIRMAN (Rep. Puwede na. ADVENTO. Unico). In fact. no cash outlay is required from the government for the availment or use of such credit. SEN. THE CHAIRMAN. provided that. di ba ganon 'yan? MS. e. as private hospitals lang. about deductions from taxable income. AQUINO. AQUINO.Furthermore. the private hospitals can claim the expense as a tax credit. hindi pa. ANGARA. Oho. All establishments covered siguro? SEN. provided that said establishments . 'di pa ba naisama natin? SEN. (Rep. ANGARA. ANGARA. ANGARA. I-tax credit na lang natin para walang cash-out ano? REP. AQUINO. hindi ba? SEN. Hindi pa. Tama. Oo. SEN. REP. Can we go back to Section 4 ha? REP. Singit na po ba yung 15% on credit. Yung about the private hospitals. THE CHAIRMAN. which finalized RA 7432. So. et cetera. The deliberations on February 5. not a deduction. Unico). Oo. THE CHAIRMAN. Okay. ANGARA. puwede na po nating hindi isama yung mga less deductions ng taxable income. ANGARA. ANGARA. before that ano. (Rep. rather than as a deduction from gross income. Unico). We quote from those deliberations as follows: "THE CHAIRMAN (Rep. Yah could be allowed as deductions in the perpetrations of (inaudible) income. AQUINO. (Rep. REP. Alisin na natin 'Yung kuwan kung ganon. Oo.

COURT OF APPEALS. and therefore remains an exception to. as discussed above. Unico). Republic of the Philippines SUPREME COURT Manila SECOND DIVISION M.provided that private establishments may claim the cost as a tax credit. the other as the law of a particular case. the Tax Code -.. Ganon ba 'yon? REP. AQUINO. general in its terms and not expressly repealing a prior special statute.* CARPIO. No. Di subject to style na lang sa Letter A". JR. ANGARA. [91] one as a general law of the land. THE CHAIRMAN.E. HOLDING CORPORATION. SEN.[93] RA 7432 is an earlier law not expressly repealed by. When the former states that a tax credit may be claimed. then the requirement of prior tax payments under certain provisions of the latter.R. [92] It is a canon of statutory construction that a later statute.deduction. Tax credit. The assailed Decision and Resolution of the Court of Appeals AFFIRMED.a general law. JJ.a later law. RA 7432 is a special law that should prevail over the Tax Code -. [w]here there are two statutes. will ordinarily not affect the special provisions of such earlier statute. and THE VELASCO. Sige Okay. they don't need to claim it. Neither can the instances of or references to a tax deduction under the Tax Code[94] be made to restrict RA 7432. Okay. AQUINO Okay. No provision of any revenue regulation can supplant or modify the acts of Congress.the fact that one is special and the other is general creates a presumption that the special is to be considered as remaining an exception to the general. G. WHEREFORE. No pronouncement as to costs. SEN.** THE HON. 160193 Petitioner. J. Present: . and COURT OF TAX APPEALS.. . QUISUMBING.versus .[89] Special Law Over General Law Sixth and last. x x x [T]he rule is that on a specific matter the special law shall prevail over the general law. Acting Chairperson. TINGA. Yah. SO ORDERED. ANGARA. REP. ANGARA. CARPIO MORALES. the Petition is hereby DENIED. the earlier special and the later general -. As a tax credit [rather] than a kuwan . SEN. . (Rep. AZCUNA.the terms of the general broad enough to include the matter provided for in the special -. cannot be made to apply. Dahil kung government.[90] In addition. which shall be resorted to only to supply deficiencies in the former.

claimed amounted to PhP 603. passed on April 23. 1996. 1996. 2(i) states: Section 2. and not as mere deductions from M. drugstores.E. On April 25.: This case involves Republic Act No.COMMISSIONER OF INTERNAL REVENUE.E. Due to the inaction of the BIR. 4(a) of RA 7432 states: SECTION 4. circuses. J. hotels and similar lodging establishments.s gross income as provided under RR 2-94. otherwise known as An Act to Maximize the Contribution of Senior Citizens to Nation Building. particularly Section 2(i). It granted. arguing that the discount to senior citizens should be treated as tax credit under Sec.E. 4(a) of RA 7432. hotels and similar lodging establishments. Sec. (Emphasis supplied. Section 2(i) of the Bureau of Internal Revenue (BIR) issued on August 23. petitioners claim for refund is hereby partially GRANTED.E. M. Promulgated: Respondents. representing overpaid income tax [for] the year 1995. concert halls. 2000. (RR) 2-94.[1] stating that it overpaid its income tax owing to the BIRs erroneous interpretation of Sec.) filed its 1995 Corporate Annual Income Tax Return. theaters.E. among others. it filed the return under protest. 1992. 2008 x-----------------------------------------------------------------------------------------x D E C I S I O N VELASCO.The senior citizens shall be entitled to the following: a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of transportation services..E. 1993.. 4(a) of RA 7432. and to toll the running of the two-year prescriptive period in filing a claim for refund. Respondent is hereby ORDERED to REFUND in favor of petitioner the amount of P122. Tax Credit refers to the amount representing the 20% discount granted to a qualified senior citizen by all establishments relative to their utilization of transportation services. restaurants.) Subsequently. the CTA rendered a Decision[2] in favor of M.424. a 20% sales discount on purchases of medicines by qualified senior citizens.) The deductions M. 1996. carnivals and other similar places of culture. cinema houses. (RA) 7432. Privileges for the Senior Citizens. March 3. sent BIR a letter-claim dated December 6. recreation centers. the fallo of which reads: WHEREFORE. was without effect for being inconsistent with RA 7432. On April 15. For purposes of these regulations: xxxx i. JR.74. in view of the foregoing. .E. (Emphasis supplied. M.E. on December 27. reiterating its position that the sales discount should be treated as tax credit. claiming the 20% sales discount it granted to qualified senior citizens. which discount shall be deducted by the said establishments from their gross income for income tax purposes and from their gross sales for value-added tax or other percentage tax purposes. DEFINITIONS. and that RR 2-94. SO ORDERED. petitioner M. treated the discount as deductions from its gross income purportedly in accordance with Revenue Regulation No. Holding Corporation (M. That private establishments may claim the cost as tax credit. restaurants and recreation centers and purchase of medicines anywhere in the country: Provided.195. However. leisure and amusement. Grant Benefits and Special Privileges and for Other Purposes. Sec. filed an appeal before the Court of Tax Appeals (CTA). M.

On July 11. the CA rendered its Decision.E. On May 24. The CTA ruled that the 20% sales discount granted to qualified senior citizens should be treated as tax credit and not as item deduction from the gross income or sales.s counsel. for its failure to present its additional evidence. On July 1. WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRAVELY ERRED AND HAS DEVIATED FROM APPLICABLE LAWS AND JURISPRUDENCE IN NOT APPRECIATING OTHER COMPETENT EVIDENCE PROVING THE AMOUNT OF DISCOUNTS GRANTED TO SENIOR CITIZENS AND MERELY RELYING SOLELY ON THE CASH SLIPS.E. the CTA reduced M. the instant petition for review.[7] Hence. 60134.. and varied administrative and incremental costs such that the government would ultimately bear the escalated costs of the sales.E. M. filed a Motion for Reconsideration. pointing out that Sec. 2000. the CA pointed out that forgotten evidence is not newly discovered evidence which can be presented to the appellate tax court.923.E. Even as it laid the entire blame on M. undefined. Unfortunately. even after it had already rendered its decision.[6] The CA denied petitioners Motion for Reconsideration on September 24.74. before the CTA was watered down by the tax courts declaration that. the term cost to mean only the direct acquisition cost. therein attributing its failure to submit and offer certain documents. Likewise.348. to the inadvertence of its independent auditor who failed to transmit the documents to M..E.E. anchored essentially on the same issues raised before the CA. Elmas Drug Corporation.E.s motion for reconsideration which contained a prayer to present additional evidence consisting of duplicate copies of the cash slips allegedly not submitted to M. Ltd.E.R.s contention that the tax credit should be based on the actual discount and not on the acquisition cost of the medicines. 2000. by its independent auditor.E. M. Thus. what appears to be the victory of M. specifically the cash slips. The CTA held that Sec.[3] In refuting M. 2003.57 after the CTA disallowed PhP 241. M. SP No. should be construed in strictissimi juris against the taxpayer.574. And citing Commissioner of Internal Revenue v. adding that to interpret the word cost to include all administrative and incremental costs to sales to senior citizens would open the floodgates for drugstores to pad the costs of the sales with such broad.923. hired found the amount PhP 603. It also argued that the tax credit should be based on the actual discount and not on the acquisition cost of the medicines. WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRAVELY ERRED AND HAS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN AFFIRMING THE COURT OF TAX APPEALS DENIAL OF PETITIONERS MOTION TO ORDER AND SUBMIT AS .46 as having been granted as sales discount to qualified senior citizens.E. went to the CA on a petition for review docketed as CA-G.195. being in the nature of a claim for exemption. failed to properly support the claimed discount with corresponding cash slips. 4(a) of RA 7432 was unequivocal on this point.E. Tokyo Shipping Co. it ruled that RA 7432 is a law that necessarily prevails over an administrative issuance such as RR 2-94.[4] where the term cost of the discount was interpreted to mean only the direct acquisition cost. excluding administrative and other incremental costs.46 sales discount to PhP 362. as did the CTA. II.[5] dismissing the petition. the CA held that claims for refund.s claim for PhP 603. the CTA denied M. 2003. 2(i) of RR 2-94 contravenes the clear proviso of RA 7432 prescribing that the 20% sales discount should be claimed as tax credit. the CA interpreted. Aggrieved. Further. as follows: I. and consequently lowered the refundable amount to PhP 122. the CTA applied the Court of Appeals (CA) ruling in CIR v.89 unsupported claims. while the independent auditor M.

been disallowed. The 20% sales discount to senior citizens may be claimed by an establishment owner as tax credit. M.E. is unequivocal on this.E. Thus. In addition. Recall also that M. misunderstood. the best evidence at that time. avers that the CA ought to have considered the special record books since their authenticity and the veracity of their contents were corroborated by the store supervisor.E. the same information embodied in the cash slips were submitted to the CTA during M. the disallowed cash slips.s taxable year 1995. According to M. DOCUMENTARY [EVIDENCE] THE CASH SLIPS WHICH THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT INADVERTENTLY DID NOT TURN OVER TO THE PETITIONERS COUNSEL. Be this as it may. claims as the 20% sales discount it granted to the senior citizens calls for an evaluation of factual matters. M. This is as it should be in the light of Sec.E.E. particularly when affirmed by the CA.E. and the factual conclusions deduced therefrom.. On the first issue. or protest. the rule is that the best evidence under the circumstance must be adduced to prove the allegations in a complaint. they cannot plausibly be considered by the courts a quo and made to corroborate pieces of evidence that have. offered the disallowed cash slips as evidence only after the CTA had rendered its assailed decision. Lest it be overlooked. RA 7432.. faults the CA for merely relying on the cash slips as basis for determining the total 20% sales discount given to senior citizens. . we do not find any justification to review all over again the evidence presented before the CTA. III. 34 of Rule 132 prescribing that no evidence shall be considered unless formally offered with a statement of the purpose why it is being offered. The determination of the exact amount M. in the first place. and Rene Amby Reyes. the law sought to be implemented. the CTA was correct in disallowing and not considering the belatedly-submitted cash slips to be part of the 20% sales discount for M.E. The implementing RR 2-94 that considers such discount as mere deductions to the taxpayers gross income or gross sales clearly clashes with the clear language of RA 7432.E. We need not delve on the nullity of the implementing rule all over again as we have already put this issue at rest in a string of cases. M. these special record books containing. [11] save when the lower courts had overlooked. While it may be true that the authenticated special record books yield the same data found in the cash slips. Amelita Gonzales. To M. the applicable law.E. were not part of M. But. As aptly put by the CA. WHETHER OR NOT THE TERM COST UNDER PARAGRAPH (A) SECTION 4 OF REPUBLIC ACT 7432 IS EQUIVALENT ONLY TO ACQUISITION COST. there are other competent pieces of evidence available to prove the same point. the belatedly-submitted cash slips do not constitute newly-found evidence that may be submitted as basis for a new trial or reconsideration of the decision. The unyielding rule is that the findings of fact of the trial court. Moreover. which. if properly considered. fails to persuade.s formal offer of evidence.E. [8] Our Ruling The petition is partly meritorious. are binding upon this Court. we will discuss the remaining issues in seriatim. Only when the best evidence cannot be submitted may secondary evidence be considered. or misinterpreted certain facts or circumstances of weight. would affect the result of the case and warrant a reversal of the decision. as it were. we cannot accept the excuse of inadvertence of the independent auditor as excusable negligence. The instant case does not fall under the exception. in the instant case. its independent auditor. hence. the Rules of Court is of suppletory application in quasi-judicial proceedings.[9] Now. petition. such as the Special Record Book required by the Bureau of Food and Drugs[10] and the Special Record Book required under RR 2-94.s offer of evidence.

663. the amount due as tax credit in favor of M.989.574.[12] of guilt for inadvertence. The cash slips were the best evidence. arbitrary.210.762. strongly asserts that the CA gravely abused its discretion in denying M. the CA noted that the belatedly-offered cash slips were presented only after the CTA had rendered its decision. PhP 9.E.E. as a matter of law.349. we interpreted the term cost found in Sec.E.242.849. as in the instant case.358.00 Less: Merchandise Inventory.489.00 Add: 20% Discount to Senior Citizens (Per Petitioners Summary) 603. the law relied upon is not only construed in strictissimi juris against the taxpayer.673. computed as follows: Net Sales PhP 94. and.328. the opportunity to submit the disallowed cash slips despite the independent auditors admission.724.46 Gross Sales PhP 95.069. End PhP 9.71.284. M.46 Less: Interest Income Subject to Final Tax 22. his negligence should not be taken against M.207.288.00 Net Operating Income /(Loss) (PhP 9. which construed the same word cost to mean the theoretical acquisition cost of the medicines purchased by qualified senior citizens. in lieu of the unsubmitted additional cash slips.519. to claim as tax credit the full amount of the sales discount granted to senior citizens. M.E.348. is entitled to a tax credit equivalent to the actual 20% sales discount it granted to qualified senior citizens. beg. In Bicolandia Drug Corporation (formerly Elmas Drug Corporation) v. having been commissioned by the CTA.E.R.00 Net Taxable Income PhP 12.E.394. in sustaining the CTA. is presumed to have done his duty in a regular manner.00 Net Income PhP 34.[13] There we categorically said that it is the Government that should fully shoulder the cost of the sales discount granted to senior citizens. On the second issue.00 Gross Income PhP 7. Accordingly. 4(a) of RA 7432 as referring to the amount of the 20% discount extended by a private establishment to senior citizens in their purchase of medicines. the special record books which are only secondary evidence. whimsical. All these factors argue against the notion that the CA had.032.198.338. therefore. We reiterate at this juncture that claims for tax refund/credit.E. M.00 Total PhP 4.s contention is correct. Grave abuse of discretion connotes capricious. or despotic exercise of jurisdiction. With the disallowance of PhP 241.E.016. contends that it is entitled.57 2) Income Tax Payment for the Year 4.54) Add: Miscellaneous Income 43.46 x 35%) PhP 4. are in the nature of claims for exemption. is PhP 151.E.574.431. Accordingly. On the third and last issue.46 Tax Due (PhP 12.46 Less: Cost of Sales Merchandise Inventory.280.s counsel explains that he relied on the independent auditors representation that all the cash slips were turned over.57 for the actual 20% sales discount granted to qualified senior citizens properly allowed by the CTA and fully appreciated as tax credit. M. SP No.989.E.00 Add Purchases 87. asserts that the independent auditor.006.57 AMOUNT OF TAX CREDIT PhP 151.201. We do not agree with M. Also. Commissioner of Internal Revenue.762.968.46 Less: Operating Expenses 17.766.988.808.86 Less: 1) Tax Credit (20% Discount with supporting documents) PhP 362.469. 49946. M. via an Affidavit. and the net amount of PhP 362.89 for being unsupported. we reversed and set aside the CAs Decision in CA-G.71 . Besides. M.00 PhP 87. whimsically and capriciously exercised its discretion. being an officer of the court.227.00 Total Goods available for Sale PhP 96. but also the proofs presented entitling a taxpayer to an exemption are strictissimi scrutinized.201.472. Thus.230. The CA surely cannot be guilty of gravely abusing its discretion when it refused to consider.923.230.

That the total amount of the claimed tax deduction net of value added tax if applicable. That the cost of the discount shall be allowed as deduction from gross income for the same taxable year that the discount is granted.201. are AFFIRMED with MODIFICATIONSinsofar as the amount and mode of payment of M. however. Sec. 2000 in CTA Case No. RA 7432 expressly provides that the sales discount may be claimed as tax credit. The CTA and the CA granted the desired refund.71. affirming the Decision of the CTA dated April 25.E. is entitled to. that on February 26.E. x x x. 2004. the 20% sales discount granted by establishments to qualified senior citizens is to be treated as tax deduction. the fallo of the April 25. (f). amending RA 7432. a new tax treatment for sales discount purchases of qualified senior citizens of medicines. we cannot agree with the courts a quo on what M. As modified. No pronouncement as to costs. upon its effectivity on March 21. this petition is PARTLY GRANTED. further. in the amount of PhP 151. we note that M. or The Expanded Senior Citizens Act of 2003. (Emphasis supplied. 4. 2003 in CA-G. The CAs Decision dated July 1. RA 9257. SP No. Privileges for the Senior Citizens. originally prayed for a tax refund for its tax overpayment for CY 1995. . xxxx The establishment may claim the discounts granted under (a). SO ORDERED. in view of the foregoing. 60134. 5604. starting taxable year 2004.R.E. of the term cost. 2000 Decision of the CTA shall read: WHEREFORE. restaurants and recreation centers. not as tax refund.E. no longer as tax credit. as amended.[14] IN VIEW OF THE FOREGOING. 2003 and its Resolution of September 24. shall be included in their gross sales receipts for tax purposes and shall be subject to proper documentation and to the provisions of the National Internal Revenue Code. Parenthetically.s claim are concerned. The senior citizens shall be entitled to the following: (a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of services in hotels and similar lodging establishments. (g) and (h) as tax deduction based on the net cost of the goods sold or services rendered: Provided. erroneous as it turned out to be. ushering in.) Conformably. 4(a) of RA 9257 provides: SEC. However.E. and purchase of medicines in all establishments for the exclusive use or enjoyment of senior citizens. petitioner M.s claim for refund is hereby PARTIALLY GRANTED in the form of a tax credit. 2004. albeit at a lower amount due to their interpretation. was signed into law. Respondent Commissioner of Internal Revenue is ORDERED to issue a tax credit certificate in favor of M. It ought to be noted. Provided.