Professional Documents
Culture Documents
Facts: The FDA was created pursuant to RA 3720, otherwise known as the “Food, Drug and Cosmetics Act”
primarily in order to establish safety or efficacy standards and quality measure of foods, drugs and devices and
cosmetics products. On March 15, 1989, the Department of Health, thru then Secretary Alfredo RA Bengzon issued
AO 67 s. 1989, entitled Revised Rules and Regulations on Registration of Pharmaceutical products. Among others, it
required drug manufacturers to register certain drug and medicine products with FDA before they may release the
same to the market for sale. In this relation, a satisfactory bioavailability/bioequivalence (BA/BE) test is needed for
a manufacturer to secure a CPR for these products. However, the implementation of the BA/BE testing requirement
was put on hold because there was no local facility capable of conducting the same. The issuance of circulars no. 1 s.
of 1997 resumed the FDA’s implementation of the BA/BE testing requirement with the establishment of BA/BE
testing facilities in the country. Thereafter, the FDA issued circular no. 8 s. of 1997 which provided additional
implementation details concerning the BA/BE testing requirement on drug products.
Held: Yes. Administrative agencies may exercise quasi-legislative or rule-making power only if there exist a law which
delegates these powers to them. Accordingly, the rules so promulgated must be within the confines of the granting
statutes and must not involve discretion as to what the law shall be, but merely the authority to fix the details in the
execution or enforcement of the policy set out in the law itself, so as to conform with the doctrine of separation of
powers and as an adjunct, the doctrine of non-delegability of legislative powers.
An administrative regulation may be classified as a legislative rule, an interpretative rule or a contingent rule.
Legislative rules are in the nature of subordinate legislation a d designed to implement a primary legislation by
providing the details thereof. They usually implement existing law, imposing general, extra-statutory obligations
pursuant to authority properly delegated by the congress amd effect a change in existing law or policy which affect
individual rights and obligations. Meanwhile, interpretative rules are intended to interpret, clarify or explain existing
statutory regulations under which the administrative body operates. Their purpose or objective is merely to construe
the statue being administered and purpory to do no more than interpret the statute. Simply, they try to say what the
statute means and refer to no single person or party in particular but concern all those belonging to the same class
which may be covered by the said rules. Finally, contingent rules are those issued by an administrative authority based
on the existence of certain facts or things upon which the enforcement of the law depends.
In general, an administrative regulation needs to comply with the requirements laid down by EO 292 s. of 1988
otherwise known as the administrative code of 1987 on prior notice, hearing and publication in order to be valid and
binding except when the same is merely an interpretative rule. This is because when an administrative rule is merely
intepretative in nature its applicability needs nothing further than its bare issuance, for it gives no real consequence
more than what the law itself has already prescribed. When, on the other hand, the administrative rule goes beyond
merely providing for the means that ca facilitate or render least cumbersome the implementation of the law but
substantially increases the burden of those governed, it behooves the agency to accord at least to those directly
affected a chance to be heard, and thereafter to be duly informed before that new issuance is given the force and
effect of law.
A careful scrutiny of the foregoing issuances would reveal that A0 67 is actually the rule that originally introduced the
BA/BE testing requirement as a component of applications for the issuamce of CPR covering certain pharmaceutical
products as such, it is considered an administrative regulation – a legislative rule to be exact – issued by the Secretary
of Health in consonance with the express authority granted to him by RA 3720 to implement the statutory mandate
that all drugs and devices should first be registered with the FDA prior to their manufacture and sale. Considering
that neither party contested the validity of its issuance, the court deems that AO 67 complied with the requirements
of prior hearing, notice and publication pursuant to the presumption of regularity accorded tl the govt in the exercise
of its official duties.
On the other hand, circulars no. 1 and 8 s. of 1997 cannot be considered as administrative regulations because they
do not: a.) implement a primary legislation by providing the details thereof; b.) Interpret, clarify or explain existing
statutory regulation under which FDA operates and/or; c.) Ascertain the existence of certain facts or things upon
which the enforcement of RA 3720 depends. In fact, the only purpose of these is for FDA to administer and supervise
the implementation of the provisions of AO 67 s. of 1989 including those covering the BA/BE testing requirement
consistent with and pursuant to RA 3720. Therefore, the FDA has sufficient authority to issue the said circulars and
since theu would not affect the substantive rights of the parties that they seek to govern – as they are not, strictly
speaking, administrative regulations in the first place – no prior hearing, consultation and publication are needed for
their validity.
Philippine Consumers Foundation, Inc. vs. Sec. of Education, Culture and Sports, G.R. No. 78385 August
31, 1987
(Admin Law, quasi-legislative power,)
Facts: The DECS, as recommended by the Task Force on Private Higher Education and through respondent
Secretary issued Dep Order No. 37, a modification of a previous Department Order, authorizing the 10% to 15%
increase in school fees. Petitioner opposed and alleged in a petition that said order was issued without any legal basis
arguing that authority of DECS to regulate school fees does not always include the power to increase the same.
Sec. 57 (3) of BP Blg. 232 (The Education Act of 1982), vests the DECS with the power to regulate the educational
system; and Sec. 70 of the same act grants the DECS the power to issue rules which are likewise necessary to discharge
its functions and duties under the law.
The respondent Secretary maintains that the increase in tuition and other school fees is urgent and necessary.
Issue: WON the fixing of school fees through department order by DECS is a valid delegation of legislative power.
Held: Yes. Power granted to the educational department to regulate the educational system includes the power to
prescribe school fees. In the absence of a statue stating otherwise, this power include the power to prescribe school
fees. No other government agency has been vested with the authority to fix school fees and as such, the power should
be considered lodged with the DECS.
PARAS, J.:
Petitioner Atty. Augusto Toledo was appointed by then Comelec Chairman Ramon Felipe as Manager of the
Education and Information Department of the Comelec, on May 21, 1986. At the time of his appointment, petitioner,
having been born on July 8, 1927 was already more than fifty-seven (57) years old. It was the first time petitioner
joined the government service as he was then engaged in active private practice prior to said appointment.
Petitioner's appointment papers, particularly Civil Service Form No. 333 and his oath of office were endorsed by the
Comelec to the Civil Service Commission (CSC, for brevity) on June 11, 1986, for approval and attestation. However,
no prior request for exemption from the provisions of Section 22, Rule III of the Civil Service Rules on Personnel
Action and Policies (CSRPAP, for brevity) was secured. Said provision prohibits the appointment of persons 57 years
old or above into the government service without prior approval by the Civil Service Commission (CSC Memorandum
Circular No. 5, Series of 1983).
Petitioner officially reported for work and assumed the functions of his office on June 16, 1986.
On January 29, 1989, public respondent Comelec, upon discovery of the lack of authority required under Section 22,
Rule III of the CSRPAP, and CSC Memorandum Circular No. 5, Series of 1983 issued Resolution No. 2066, the
pertinent portion of which is hereinbelow quoted, to wit:
WHEREAS, for the validity then of the appointment of Atty. Toledo as Manager of the Education and
Information Department it was necessary that not only must prior authority from the Civil Service
Commission be obtained considering that he was more than fifty-seven (57) years old at the time, it must as
well be shown that (a) the exigencies of the service so required, (b) Atty. Toledo possesses special qualification
not possessed by other officers or employees in the Commission, and (c) the vacancy cannot be filled by
promotion of qualified officers or employees in the Commission;
WHEREAS, there is nothing in the 120 File of Atty. Toledo that indicates that such authority was even
obtained from the Civil Service Commission or from the President of the Philippines; moreover, conditions
(a), (b) and (c) stated in the immediately preceding clause did not then exist;
WHEREAS, the appointment then of Atty. Toledo was made in violation of law and pursuant to Section 7,
Rule III of the Civil Service Rules on Personnel Action, the appointment was void from the beginning.
NOW, THEREFORE, be it resolved, as it is hereby resolved, to DECLARE as VOID from the beginning
the appointment of Atty. Augusto Toledo as Manager of the Education and Information Department of this
Commission. (pp. 49-50, Rollo)
Petitioner appealed the foregoing Comelec Resolution No. 2066 to public respondent CSC on February 4, 1989.
On July 12, 1989, public respondent CSC promulgated Resolution No. 89-468 which disposed of the appeal, thus:
WHEREFORE, foregoing premises considered, the Commission resolved to declare, as it hereby declares the
appointment of Augusto V. Toledo as Manager, Information and Education Department, Commission on
Elections, there being no basis in law, merely voidable and not void ab initio. Hence, Atty. Toledo is considered
a de facto officer from the time he assumed office on June 16, 1986, until and up to the promulgation of
COMELEC Resolution No. 2066 on January 29, 1989. (pp. 35-36, Rollo)
Unable to obtain a reconsideration from the aforesaid Resolution, petitioner filed the present petition for certiorari.
It is first contended by petitioner that CSC Resolution No. 89-468 is without legal basis because the CSRPAP is
invalid and unenforceable for not having been published in the Official Gazette or in any newspaper of general
circulation as required under Section 9(b) of P.D. 807. This being the case, petitioner argues that the requirement of
prior CSC authority to appoint persons 57 years or older under Section 22, Rule III of the CSRPAP has not "become
effective" and cannot be invoked against him.
It will be recalled that the Civil Service Act of 1959 (Republic Act No. 2260) took effect on June 19, 1959. That act,
among other things, established a Civil Service Commission one of the functions of which was, "with the approval
by the President, to prescribe, amend, and enforce suitable rules and regulations for carrying into effect the provisions
of ... the Civil Service Law," said rules "to become effective thirty days after publication in the Official Gazette" [Sec.
16 (e)].
The Commission subsequently adopted and promulgated rules intended to carry the law into effect, known as the
Revised Civil Service Rules. Those rules were published in the supplement to Vol. 58, No. 49 of the Official Gazette,
dated December 3, 1962.
SEC. 5. No person shall be appointed or reinstated in the service if he is already 57 years old, unless the
President of the Philippines, President of the Senate, Speaker of the House of Representatives, or the Chief
Justice of the Supreme Court, as the case may be, determines that he possesses special qualifications and his
services are needed.
It is worthy of note, however, that the statute itself (RA 2260) contained no provision prohibiting appointment or
reinstatement in the Government service of any person who was already 57 years old, or otherwise requiring that
some limitation as regards to age be placed on employment in the Government service. This prohibition was purely
a creation of the Civil Service Commission.
On October 6, 1975, pursuant to the 1973 Constitution, Presidential Decree No. 807 was issued by President Marcos,
establishing "an independent Civil Service Commission." The decree, known as the "Civil Service Decree of the
Philippines," repealed or accordingly modified all laws, rules, and regulations or parts thereof inconsistent" with its
provisions (Sec. 59), although it declared that "the former Civil Service Commission created under Republic Act No.
2260, as amended, and as organized under the Integrated Reorganization Plan may serve as the nucleus of the Civil
Service Commission" (Fourth Whereas Clause, Preamble). Like RA 2260 which it superseded, PD 807 empowered
the Commission to "prescribe, amend, and enforce suitable rules and regulations for carrying into effect the provisions
of the Decree," and also provided that said "rules and regulations shall become effective thirty (30) days after
publication in the Official Gazette or in any newspaper of general circulation."
The new Civil Service Commission adopted "rules and regulations for carrying into effect the provisions" of the Civil
Service Decree on November 20, 1983. The rules were named, "Civil Service Rules on Personnel Actions and Policies"
(CSRPAP). Section 22, Rule III of the CSRPAP is substantially the same as Section 5, Rule VI of the quondam
"Revised Civil Service Rules" and it reads as follows:
SEC. 22. No person shall be appointed, reinstated, or re-employed in the service if he is already 57 years old,
unless the President, or the Chief Justice of the Supreme Court, in the case of employees in the judiciary,
determines that he possesses special qualifications urgently needed by the hiring agency.
Omitted, it will be observed, was reference to the "President of the Senate" and the "Speaker of the House of
Representatives," both of whom were expressly mentioned in the counterpart provision in the former rules (Section
5, Rule VI, supra).
Noteworthy, too, is that there is no provision at all in PD 807 dealing in any manner with the appointment,
reinstatement or re-employment in the Government service of any person already 57 years or any particular age, for
that matter. Again, the provision regarding persons 57 years of age was purely a creation of the Commission, having
no reference to any provision in the decree intended to be implemented.
It was this provision of the CSRPAP (Sec. 22, Rule III) which was applied to Toledo. According to the CSC, since
prior authority for Toledo's appointment had never been obtained — indeed, it would appear that the appointment
papers were not transmitted by the COMELEC to the CSC until February, 1989 at which time Toledo's appointment
was "approved as permanent" by the Executive Director of said CSC—the appointment had to be struck down.
Now, these rules and regulations (CSRPAP) were never published either in the Official Gazette or any newspaper of
general circulation, at least as of the time that Section 22, Rule III thereof was applied to Toledo to the latter's
prejudice. As much was admitted by the Chairman of the Commission, Hon. Patricia A. Sto. Tomas in a letter written
by her to Toledo dated February 2, 1989. In that letter, the Chairman stated that (a) the Commission had "no record
of the publication of said Rules ("Rules on Personnel Actions and Policies") in newspapers of general circulation"
although said Rules were "published and distributed by the National Media Production Center in 1975," and that (b)
only "the Rule on Promotion embodied in CSC Resolution No. 83-343 repealing Rule V of the said Rules was
published on August 15, 1983 in Volume 79 No. 33 of the Official Gazette" (Annex I, petition). The lack of
publication is also attested by the Director of the National Printing Office who, in a Certification issued by him on
January 30, 1989, stated that "the RULES ON PERSONNEL ACTIONS AND POLICIES' promulgated on
November 20, 1975 by the Civil Service Commission implementing Presidential Decree No. 807 was not submitted
to this office for publication" (Annex J, petition).
The Revised Civil Service Rules implementing R.A. No. 2260 cannot be considered valid and effective after RA 2260
was repealed and superseded by PD 807. PD 807 was obviously intended to take the place of RA 2260. In all matters
dealt with by both laws, the provisions of PD 807 were obviously intended to be controlling. So, also, the rules
promulgated by the Civil Service Commission to carry the provisions of PD 807 into effect were meant to supersede
or take the place of the rules implementing RA 2260. In other words, PD 807 and the CSRPAP were intended to
make RA 2260 and its implementing rules functus officio, render them without force and effect except only as regards
any provision, if at all, not dealt with by PD 807 or the CSRPAP.
Now, it may reasonably be assumed that the law-making authority at the time, the President, was aware of the
provision on 57-year old persons in the Revised Civil Service Rules promulgated under RA 2260. Yet when he
promulgated PD 807 the President did not see fit to incorporate therein any provision regarding 57-year old persons
or for that matter, to prescribe any age beyond which persons could become ineligible for appointment, reintatement
or re-employment. This surely is an indication of an intention not to continue the provision in effect.
In any event, the provision on 57-year old persons in the Revised Civil Service Rules (under said RA 2260) cannot be
accorded validity. As already pointed out, it is entirely a creation of the Civil Service Commission, having no basis in
the law itself which it was meant to implement. It cannot be related to or connected with any specific provision of
the law which it is meant to carry into effect, such as a requirement, for instance, that age should be reckoned as a
factor in the employment or reinstatement of an individual, or a direction that there be a determination of some point
in a person's life at which he becomes unemployable, or employable only under specific conditions. It was therefore
an unauthorized act of legislation on the part of the Civil Service Commission. It cannot be justified as a valid exercise
of its function of promulgating rules and regulations for that function, to repeat, may legitimately be exercised only
for the purpose of carrying the provisions of the law into effect; and since there is no prohibition or restriction on
the employment of 57-year old persons in the statute—or any provision respecting age as a factor in employment—
there was nothing to carry into effect through an implementing rule on the matter.
The power vested in the Civil Service Commission was to implement the law or put it into effect, not to add to it; to
carry the law into effect or execution, not to supply perceived omissions in it. "By its administrative regulations, of
course, the law itself can not be extended; said regulations 'cannot amend an act of Congress.' " (Teoxon v. Members
of the Board of Administrators, Philippine Veterans Administration, 33 SCRA 585, 589 [1970], citing Santos v.
Estenzo, 109 Phil. 419 [1960]; see also, Animos v. Philippine Veterans Affairs Office, 174 SCRA 214, 223-224 [1989]
in turn citing Teoxon).
The considerations just expounded also conduce to the conclusion of the invalidity of Section 22, Rule III of the
CSRPAP. The enactment of said section, relative to 57-year old persons, was also an act of supererogation on the part
of the Civil Service Commission since the rule has no relation to or connection with any provision of the law supposed
to be carried into effect. The section was an addition to or extension of the law, not merely a mode of carrying it into
effect.
Apart from this, the CSRPAP cannot be considered effective as of the time of the application to Toledo of a provision
thereof, for the reason that said rules were never published, as is admitted on all sides. The argument that the CSRPAP
need not be published, because they were "a mere reiteration of existing law" and had been "circularized," flies in the
teeth of the explicit and categorical requirement of PD 807 that rules and regulations for carrying into effect the
provisions of the Decree shall become effective thirty (30) days after publication in the Official Gazette or in any
newspaper of general circulation. Moreover, the CSRPAP cannot properly be considered a mere reiteration of existing
law, for as already discussed, the implementing rule governing 57-year old persons is invalid and cannot in any sense
be considered "existing law."
Assuming without conceding that the rule regarding employment of 57-year old persons is valid and enforceable, it
can only apply, according to its express terms, to employees under the supervision of the Chief Justice of the Supreme
Court, or of the President of the Philippines, these two being the only officials mentioned as having to give consent
to the employment of said persons. It cannot be construed as applying to employees over whom neither the President
nor the Chief Justice exercises supervision, such as the Senate or the House of Representatives, or the COMELEC
or other Constitutional Commissions.
One last word. There is absolutely no question about the fact that the only reason for Toledo's separation from the
service was the fact that he was already more than 57 years old when he was invited to work in the COMELEC by its
former Chairman, but through no fault of his own, not all the conditions for his employment appear to have been
satisfied. There is no question that it was not Toledo's fault that his papers were tardily submitted to the Civil Service
Commission and approval of his appointment was made only by the Executive Director of the Commission and not
by the Chairman thereof (to whom the function of the President of approving appointments like those of Toledo had
been delegated under LOI 47, CSC Memo Circular No. 5, Series of 1983). There is no question, too, that he was
actively engaged in law practice when taken into the COMELEC. There is absolutely no question about the fact that
he was otherwise a competent and efficient officer of the COMELEC and had not given the remotest cause for
dismissal. These are equitable considerations proscribing application to him of the provision in question, assuming its
validity, or impelling at least a restrictive application thereof so that it may not work to his prejudice.
Premises considered, the petition is hereby GRANTED.
SO ORDERED.
Held:
Yes. It is noteworthy that the assailed circulars do not prohibit the petitioner from engaging in the recruitment
and deployment of Filipino landbased workers for overseas employment. A careful reading of the challenged
administrative issuances discloses that the same fall within the "administrative and policing powers expressly or by
necessary implication conferred" upon the respondents (People vs. Maceren, 79 SCRA 450).
The power to "restrict and regulate conferred by Article 36 of the Labor Code involves a grant of police power
(City of Naga vs. Court of Appeals, 24 SCRA 898).
To "restrict" means "to confine, limit or stop" and whereas the power to "regulate" means "the power to
protect, foster, promote, preserve, and control with due regard for the interests, first and foremost, of the public, then
of the utility and of its patrons" (Philippine Communications Satellite Corporation vs. Alcuaz, 180 SCRA 218).
The questioned circulars are therefore a valid exercise of the police power as delegated to the
executive branch of Government. Nevertheless, they are legally invalid, defective and unenforceable for lack
of power publication and filing in the Office of the National Administrative Register as required in Article
2 of the Civil Code, Article 5 of the Labor Code and Sections 3(1) and 4, Chapter 2, Book VII of the
Administrative Code of 1987 which provide:
Art. 2. Laws shall take effect after fifteen (15) days following the completion of their publication in the Official
Gazatte, unless it is otherwise provided. . . . (Civil Code.)
Art. 5. Rules and Regulations. — The Department of Labor and other government agencies charged with the
administration and enforcement of this Code or any of its parts shall promulgate the necessary implementing rules
and regulations. Such rules and regulations shall become effective fifteen (15) days after announcement of their adoption in
newspapers of general circulation. (Emphasis supplied, Labor Code, as amended.)
Sec. 3. Filing. — (1) Every agency shall file with the University of the Philippines Law Center, three (3) certified copies of every
rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within three (3) months shall
not thereafter be the basis of any sanction against any party or persons. (Emphasis supplied, Chapter 2, Book VII of
the Administrative Code of 1987.)
Sec. 4. Effectivity. — In addition to other rule-making requirements provided by law not inconsistent with this Book, each rule
shall become effective fifteen (15) days from the date of filing as above provided unless a different date is fixed by law, or specified
in the rule in cases of imminent danger to public health, safety and welfare, the existence of which must be expressed
in a statement accompanying the rule. The agency shall take appropriate measures to make emergency rules known to
persons who may be affected by them. (Emphasis supplied, Chapter 2, Book VII of the Administrative Code of 1987).
PESIGAN vs. ANGELES, G.R. No. L-64279, April 30, 1984
FACTS:
Petitioners Anselmo and Marcelino Pesigan, carabao dealers, transported in a 10-wheeler truck in April 1982,
26 carabaos and a calf, from Camarines Sur to Batangas. Despite the health certificate, permit to transport, and
certificate of inspection issued to them by the provincial veterinarian, provincial commander and constabulary
command, respectively, while petitioners were negotiating the town of Basud, Camarines Norte, the carabaos were
confiscated by private respondents, Police Station Commander Lt. Zanarosa, and provincial veterinarian Dr.
Miranda. The confiscation was based on Executive Order 626-A which prohibited the transport of carabaos from
one province to another. Pursuant to EO 626-A, Dr Miranda distributed the carabaos to 25 farmers of
Basud. Petitioners filed for recovery of the carabaos and damages, against private respondent Judge Angeles who
heard the case in Daet and later transferred to Caloocan City, and dismissed the case for lack of cause of action.
ISSUE:
Whether or not EO 626-A be enforced before its publication in the Official Gazette.
HELD:
Said executive order should not be enforced against the Pesigans on April 2, 1982 because, as already noted,
it is a penal regulation published more than two months later in the Official Gazette dated June 14, 1982. It became
effective only fifteen days thereafter as provided in article 2 of the Civil Code and section 11 of the Revised
Administrative Code.
The word "laws" in article 2 (article 1 of the old Civil Code) includes circulars and regulations which prescribe
penalties. Publication is necessary to apprise the public of the contents of the regulations and make the said penalties
binding on the persons affected thereby.
LA SUERTE CIGAR & CIGARETTE FACTORY, Petitioner, vs. COURT OF APPEALS and
COMMISSIONER OF INTERNAL REVENUE, Respondents. (G.R. No. 125346; November 11, 2014)
FACTS:
These cases involve the taxability of stemmed leaf tobacco imported and locally purchased by cigarette
manufacturers for use as raw material in the manufacture of their cigarettes. Under the Tax Code, if it is to be exported
or to be used in the manufacture of cigars, cigarettes, or other tobacco products on which the excise tax will eventually
be paid on the finished product.
La Suerte was assessed by the BIR for excise tax deficiency amounting to more than 34 million pesos. La
Suerte protested invoking the Tax Code which allows the sale of stemmed leaf tobacco as raw material by one
manufacturer directly to another without payment of the excise tax. However, the CIR insisted that stemmed leaf
tobacco is subject to excise tax "unless there is an express grant of exemption from [the] payment of tax."
La Suerte petitioned for review before the CTA which cancelled the assessment. The CIR appealed to the CA
which reversed the CTA. The CIR invoked a revenue regulation (RR) which limits the exemption from payment of
specific tax on stemmed leaf tobacco to sales transactions between manufacturers classified as L-7 permittees.
ISSUES:
[1] Is stemmed leaf tobacco subject to excise (specific) tax?
[2] Is purchase of stemmed leaf tobacco from manufacturers who are not classified as L-7 permittees subject to tax?
[3] Is the RR valid?
[4] Is the possessor or owner, or importer or exporter, of stemmed leaf tobacco liable for the payment of specific tax
if such tobacco product is removed from the place of production without payment of said tax?
[5] Does the imposition of excise tax on stemmed leaf tobacco under Section 141 of the 1986 Tax Code constitute
double taxation, considering they are paying the specific tax on the raw material and on the finished product in which
the raw material was a part?
HELD:
[1] Yes, excise taxes on domestic products shall be paid by the manufacturer or producer before[the] removal [of
those products] from the place of production." "It does not matter to what use the article[s] subject to tax is put; the
excise taxes are still due, even though the articles are removed merely for storage in some other place and are not
actually sold or consumed.
When tobacco is harvested and processed either by hand or by machine, all itsproducts become subject to specific
tax. Section 141 reveals the legislative policy to tax all forms of manufactured tobacco — in contrast to raw tobacco
leaves — including tobacco refuse or all other tobacco which has been cut, split, twisted, or pressed and is capable of
being smoked without further industrial processing.
Stemmed leaf tobacco is subject to the specific tax under Section 141(b). It is a partially prepared tobacco. The removal
of the stem or midrib from the leaf tobacco makes the resulting stemmed leaf tobacco a prepared or partially prepared
tobacco.
Despite the differing definitions for "stemmed leaf tobacco" under revenue regulations, the onus of proving that
stemmed leaf tobacco is not subject to the specific tax lies with the cigarette manufacturers. Taxation is the rule,
exemption is the exception.
[2] Stemmed leaf tobacco transferred in bulk between cigarette manufacturers are exempt from excise tax under the
Tax Code vis-a-vis RRs.
Section 137 authorizes a tax exemption subject to the following: (1) that the stemmed leaf tobacco is sold in bulk as
raw material by one manufacturer directly to another; and (2) that the sale or transfer has complied with the conditions
prescribed by the Department of Finance.
The conditions under which stemmed leaf tobacco may be transferred from one factory to another without
prepayment of specific tax are as follows: (a) The transfer shall be under an official L-7 invoice on which shall be
entered the exact weight of the tobacco at the time of its removal; (b) Entry shall be made in the L-7 register in the
place provided on the page for removals; and (c) Corresponding debit entry shall bemade in the L-7 register book of
the factory receiving the tobacco under the heading, "Refuse, etc.,received from the other factory," showing the date
of receipt, assessment and invoice numbers, name and address of the consignor, formin which received, and the
weight of the tobacco.
[3] Yes, valid. Under Section 3(h) of RR No. 17-67, entities that were issued by the Bureau of Internal Revenue with
an L-7 permit refer to "manufacturers of tobacco products." Hence, the transferor and transferee of the stemmed leaf
tobacco must be an L-7 tobacco manufacturer.
The reason behind the tax exemption of stemmed leaf tobacco transferred between two L-7 manufacturers is that the
same had already been previously-taxed when acquired by the L-7 manufacturer from dealers of tobacco. There is no
new product when stemmed leaf tobacco is transferred between two L-7 permit holders. Thus, there can be no excise
tax that will attach. The regulation, therefore, is reasonable and does not create a new statutory right.
Moreover, although delegation is not allowed as a rule, the power to fill in the details and manner as to the enforcement
and administration of a law may be delegated to various specialized administrative agencies.
[4] Importation of stemmed leaf tobacco not included in the exemption. The transaction contemplated in Section 137
does not include importation of stemmed leaf tobacco for the reason that the law uses the word "sold" to describe
the transaction of transferring the raw materials from one manufacturer to another.
[5] In this case, there is no double taxation in the prohibited sense because the specific tax is imposed by explicit
provisions of the Tax Code on two different articles or products: (1) on the stemmed leaf tobacco; and (2) on cigar
or cigarette.