Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-13032             August 31, 1959

PHILIPPINE-AMERICAN DRUG COMPANY, petitioner,

vs.
COLLECTOR OF INTERNAL REVENUE and COURT OF TAX APPEALS, respondents.

Jose F. Ochoa for petitioner.

Assistant Solicitor General Jose P. Alejandro and Attorney Alejandro B. Afurong for
respondents.

BARRERA, J.:

Based on a stipulation of facts submitted by the parties, Philippine American Drug Co.,
petitioner, and the Collector of Internal Revenue, respondent in CTA Case No. 265 the
pertinent portions of which are quoted hereunder:

2. That during the period from February 14, 1951 to December 31, 1954, petitioner
did not for purposes of computing the advance sales tax on its importations include
as part of the landed cost the difference (P.015) between the amounts actually paid
by it to the bank on said importations computed at the rate of P2.015 for every U. S.
dollar and the value of the imported goods computed at the legal rate of P2.00 for
every U. S. dollar;

3. That the difference of P0.015 represents the premium on the dollar charged by the
bank and paid by the petitioner in the purchase of foreign exchange;

4. That in November 4, 1955, respondent demanded from petitioner (Demand No.

13756) the payment of the sum of P10, 243.13 as deficiency advance sales tax, . .;

xxx     xxx     xxx

9. That the only question involved in this case is whether or not the difference of
P0.015, representing the premium on the dollar charged by the bank to the importer-
petitioner and paid by it in the purchase of foreign exchanged (U. S. dollar), should
from part of the landed cost of the imported articles for purposes of computing the
advance sales tax, assuming that respondent's ruling dated June 21, 1954, as quoted
in the 5th paragraph hereof, was issued in accordance with law and reflects the
correct interpretation thereof;

xxx     xxx     xxx

the Court of Tax Appeals rendered judgment in said case upholding the validity of the
decision of the Collector of Internal Revenue imposing sales tax on the bank premium of
P0.015 for every U. S. dollar purchased by the petitioner Philippine American Drug Co.
required for its importations from February 14, 1951, to December 31, 1954, which tax
together with the surcharges thereon, amounted to P10,243.13. Hence, this appeal by the
taxpayer.
In demanding collection of the disputed assessment, the respondent Collector of Internal
Revenue invokes Section 183-(B), as amended, of the National Internal Revenue Code
which provides:

SEC. 183. Payment of percentage taxes. —

xxx     xxx     xxx

(B) Sales tax on imported articles. When the articles are imported, the percentage
taxes established in section one hundred eighty-four, one hundred eighty-five, and
one hundred eighty-six of this code shall be paid in advance by the importer, in
accordance with regulations promulgated by the Secretary of Finance and prior to the
release of such articles from custom's custody, based on the import invoice value
thereof, certified to as correct by the Philippine Consul at the port of origin if there is
any, including freight, postage, insurance, commission, customs duty and all similar
charges, plus one hundred per centum of such total value in the case of articles
enumerated in section one hundred and eighty-four; fifty per centum of such total
value in the case of articles enumerated in section one hundred and eighty-five; and
twenty-five per centum in the case of articles enumerated in section one hundred
and eighty-six . . . .

The questions presented herein actually revolve around the nature or characteristic of the
above-mentioned bank premium, that is whether said bank charge falls under the category
of the charges enumerated in Art. 183-(B) of the Tax Code as included in the taxable value
of imported goods and, therefore, must be declared for tax purposes. This case is not one of
first impression to this Court, because in our decision in the case of Genato Commercial
Corporation vs. The Court of Tax Appeals, et al., 104 Phil., 615; 55 Off. Gaz. (12), 2092 the
same issue was resolved, thus:

As may be seen, an importer is required to pay in advance the necessary percentage

tax on the articles imported "based on the import invoice value thereof, certified to as
correct by the Philippine Consul at the port of origin if there is any, including freight,
postage, insurance, commission, customs duty, and all similar charges." In other
words, the law requires that it be included in the assessment not only the import
invoice value of merchandise, which includes freight, postage, insurance,
commission, and customs duty, but all other similar charges which would necessarily
increase the landed cost of the merchandise imported, which, in our opinion, should
include the difference of P0.015 paid by petitioner to a local bank in the purchase of
foreign exchange to carry out the importation. Indeed, the intention of Congress in
enacting the above-quoted provision is to include in the assessment all charges,
whether specified or otherwise, which an importer has to pay to complete his
importation.

Invoking the rule of ejusdem generis which provides that "where, in a statute, general
words follow a designation of particular subjects or classes of persons, the meaning
of the general words will ordinarily be presumed to be restricted by the particular
designation, class or nature as those specifically enumerated," petitioner contends
that the difference of P0.015 which it paid to a local bank in the purchase of foreign
exchange to cover the importation in question cannot be included in the assessment
for the purpose of determining the advance sales tax because they are not similar to
the charges specifically enumerated in the law.
 With this we disagree, for it cannot be denied that the intention of the law is to
include all charges that may be paid by the importer to bring the importation into the
country. In other words, all items of expense that may be incurred by the importer in
bringing the importation into the country and which would necessarily increase the
landed cost must be deemed included in the phrase "all similar charges" mentioned
in the law. The doctrine of ejusdem generis is but a rule of construction adopted as
an aid to ascertain and give effect to the legislative intent when that intent is uncertain
or ambiguous, but the same should not be given such wide application that would
operate to defeat the purpose of the law. In other words, the doctrine is not of
universal application. Its application must yield to the manifest intent of Congress
(State vs. Prather, 21 L.R.A. 23, 25)

But it is contended that, even assuming that the difference of P0.015 paid by the
petitioner be considered as a proper charge to be included in the assessment of the
advance sales tax, still the same should be deemed as covered and absorbed by the
corresponding mark-up prescribed by law. This contention is erroneous as being
contrary to the clear import of the law. Thus, the law requires that the importer should
pay the advance sales tax based on the import invoice value of the merchandise,
including those charges therein enumerated, plus one hundred per centum of such
total value in the case of articles enumerated in section one hundred and eighty-four;
fifty per centum in case of articles enumerated in section one hundred and eighty-
five; and twenty-five per centum in the case of articles enumerated in section one
hundred and eighty-six." In other words, the mark-up prescribed by law is to be
considered in addition to the invoice value and all incidental expenses of importation.

There is no dispute that in the Parity Exchange Law (Republic Act No. 77) the legal
rate of exchange is P2.00 for every U. S. dollar and that this rate has always been
maintained by the government through various proclamations of the President of the
Philippines, but the existence of such legal rate does not preclude the government
from including in the landed cost the difference paid by the importer in the purchase
of foreign exchange if such difference has actually been paid in carrying out the
importation. The importer could have paid the legal rate in purchasing the foreign
exchange but if he chooses to pay a different rate he should declare the difference for
that goes to increase the cost in completing the importation.

As an additional argument not urged in the Genato case, appellant herein cites the change
in the wording of the law as an indication of the intention of Congress to limit the meaning of
the phrase "all similar charges." Before Section 183-(B) of the National Internal Revenue
Code was first amended by Republic Act 594 on February 16, 1951, it provided that the tax
was imposed on imported articles "based on the total value thereof at the time they are
received by the importer, including freight, postage, insurance, commission, customs duty,
and all similar charges." Republic Act No. 594 amended the section so that the tax on
imported articles shall be "based on the import invoice value thereof, certified to as correct
by the Philippine Consul at the port of origin if there is any, including freight, postage,
insurance, commission, customs duty, and all similar charges." Ascribing undue import to
this amendment, counsel for appellant argues:" Though we might concede that the term
'total value' in the provision just quoted could be interpreted to include the premiums that
banks charged the importers for opening letters of credit, we cannot subscribe to the
proposition suggested by the Court of Tax Appeals that the term 'import invoice value',
which Republic Act 594 introduced in lieu of the term 'total' value, can be so interpreted. For
to admit the correctness of said pro position is to entirely render meaningless the deletion of
the term 'total value' and the insertion in its stead of the term 'import invoice value'
accomplished by Republic Act 594."
The inference sought to be drawn by appellant from this change in the law is unjustified.
Whether we interpret the phrase "all similar charges" as component part of and therefore
already included in the "total value therefore", as appellant seems to accept, or we merely
add "all similar charges" as a separate item to "the import invoice value thereof", as the
present law provides, the result will be the same: the tax is to be based upon the total
landed cost of the imported articles, as pointed out in the Genato case.

Appellant herein further assails the legality of the assessment because, it is claimed,
retroactive effect is being given to the ruling of the Collector of June 21, 1954 which is void
for lack of approval by the Secretary of Finance, and is made to apply to transactions long
closed in the books of the taxpayer. We find no merit in this contention. As the Court of Tax
Appeals has rightly said "The validity or invalidity of the ruling of respondent of June 21,
1954 is not material to this case. What is material here is the correctness of respondent's
decision of November 4, 1955, which is the decision appealed from. (See par. 3, Petition for
Review.) Even if the ruling of June 21, 1954 is invalid for lack of approval of the Secretary of
Finance, upon which we do not here express an opinion, it would not affect the correctness
of the decision of November 4, 1955, which we have found to be in accordance with Section
183-(B) of the Revenue Code."

As to the claim that transactions long closed in the books of the taxpayer can no longer be
examined for the purpose of making a reassessment, suffice it to say that the
underassessment of the total landed value of the imported merchandise was brought about
by the importer's failure to add to the aforesaid landed value the premium collected by the
bank on foreign exchange transactions. Hence, the same remained undetected until later
when, in connection with its claim for credit for overpaid sales tax, the taxpayer's record was
investigated. Moreover, even granting arguendo that the tax agent's inability to make the
correct assessment reflected against their efficiency or ability, such fact alone does not
preclude the Government from effecting a corrected assessment upon discovery of the
error. As this court has explicitly ruled:

If in assessing income tax (or other kinds of tax) upon the return of the taxpayer, an
error is made with the result that the tax is underassessed, the Collector has the
power to reassess and collect any additional tax upon the returns for said years, even
after the death of the taxpayer. The government is not estopped by error or mistake
on the part of its agents (Pineda vs. Court of First Instance of Tayabas, et al., 52
Phil., 803).

This of course understood to be without prejudice to the defense of prescription

inappropriate cases.

Wherefore, the decision of the Court of Tax Appeals being an accordance with the evidence
and the applicable law, the same is hereby affirmed, with costs against the appellant. It is so
ordered.

Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Concepcion and Endencia,
JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 106724 February 9, 1994

THE NATIONAL POLICE COMMISSION, represented by its Acting Chairman, Cesar

Sarino, Teodolo C. Natividad, Vice-Chairman and Executive Officer, Brig. Gen. Virgilio
H. David, Edgar Dula Torre, Guillermo P. Enriquez, Commissioners, and Chief Supt.
Levy D. Macasiano Director for Personnel, petitioners,
vs.
Honorable Judge Salvador de Guzman, Jr., Chief Supt. Norberto M. Lina, Chief Supt.
Ricardo Trinidad, Jr., Sr. Supt. Manuel Suarez, Supt. Justito B. Tagum, Sr. Supt.
Tranquilino Aspiras, Sr., Supt. Ramon I. Navarro,
Sr. Supt. Ramon I. Navarro, Sr. Supt. Jose P. Suria, Sr. Supt. Agaton Abiera, Chief
Insp. Bienvenido Torres, and the National (ROTC) Alumni Association Inc. (NARRA),
represented by its President Col. Benjamin Gundran, and Director Hermogenes
Peralta, Jr., respondents.

The Solicitor General for petitioners.

Renecio R. Espiritu for private respondents.

Diosdado P. Peralta for respondent-intervenor.

BIDIN, J.:

The case at bar had its origin in the implementation of the compulsory retirement of PNP
officers as mandated in Sec. 39, RA 6975, otherwise known as "An Act Establishing the
Philippine National Police Under a Reorganized Department of the Interior and Local
Government", which took effect on
January 2, 1991. Among others, RA 6975 provides for a uniform retirement system for PNP
members. Section 39 thereof reads:

Sec. 39. Compulsory Retirement. — Compulsory retirement, for officer and

non-officer, shall be upon the attainment of age fifty-six (56); Provided, That, in
case of any officer with the rank of chief superintendent, director or deputy
director general, the Commission may allow his retention in the service for an
unextendible period of one (1) year.

Based on the above provision, petitioners sent notices of retirement to private respondents
who are all members of the defunct Philippine Constabulary and have reached the age of
fifty-six (56).
In response, private respondents filed a complaint on December 19, 1991 for declaratory
relief with prayer for the issuance of an ex parte restraining order and/or injunction
(docketed as Civil Case No. 91-3498) before the Regional Trial Court of Makati, Branch 142.
In their complaint, respondents aver that the age of retirement set at fifty-six (56) by Section
39 of RA 6975 cannot be applied to them since they are also covered by Sec. 89 thereof
which provides:

Any provision hereof to the contrary notwithstanding, and within the transition
period of four (4) years following the effectivity of this Act, the following
members of the INP shall be considered compulsorily retired:

a) Those who shall attain the age of sixty (60) on the first year of the effectivity
of this Act.

b) Those who shall attain the age of fifty-nine (59) on the second year of the
effectivity of this Act.

c) Those who shall attain the age of fifty-eight (58) on the third year of the
effectivity of this Act.

d) Those who shall attain the age of fifty-seven (57) on the fourth year of the
effectivity of this Act.

It is the submission of respondents that the term "INP" includes both the former members of
the Philippine Constabulary and the local police force who were earlier constituted as the
Integrated National Police (INP) by virtue of
PD 765 in 1975.

On the other hand, it is the belief of petitioners that the 4-year transition period provided in
Section 89 applies only to the local police forces who previously retire, compulsorily, at age
sixty (60) for those in the ranks of Police/Fire Lieutenant or higher (Sec. 33, PD 1184); while
the retirement age for the PC had already been set at fifty-six (56) under the AFP law.

On December 23, 1991, respondent judge issued a restraining order followed by a writ of
injunction on January 8, 1992 upon posting of a P100,000.00 bond by private respondents.

After the parties have submitted their respective pleadings, the case was submitted for
resolution and on August 14, 1992, the respondent judge rendered the assailed decision,
the decretal portion of which reads:

WHEREFORE, the court hereby declares that the term "INP" in Section 89 of
the PNP Law includes all members of the present Philippine National Police,
irrespective of the original status of the present members of the Philippine
National Police before its creation and establishment, and that Section 39
thereof shall become operative after the lapse of the
four-year transition period.

The preliminary injunction issued is made permanent.

SO ORDERED. (Rollo, pp. 29-30)

Petitioners filed the instant petition on October 8, 1992 seeking the reversal of the above
judgment. On January 12, 1993, the Court resolved to treat the respondents' Comment as
Answer and gave due course to the petition.

In ruling in favor of private respondents, respondent judge observed, among others, that:

It may have been the intention of Congress to refer to the local police forces
as the "INP" but the PNP Law failed to define who or what constituted the INP.
The natural recourse of the court is to trace the source of the "INP" as courts
are permitted to look to prior laws on the same subject and to investigate the
antecedents involved. There is nothing extant in the statute books except that
which was created and established under
PD 765 pursuant to the mandate of Article XV of the 1973 Constitution
providing that the "State shall establish and maintain an integrated national
police force whose organization, administration and operation shall be
provided by law." Heretofore, INP was unknown. And the said law
categorically declared the PC "as the principal component of the Integrated
National Police" (Sec. 5, PD 765).

The court was supplied by respondents (petitioners herein) with excerpts

taken from the discussion amongst the members of Congress concerning the
particular provision of Section 89. The court is not persuaded by said
discussion; it was a simple matter for the members of the legislature to state
precisely in clear and unequivocal terms their meaning, such as "integrated
police" as used in PD 765. Instead, they employed "INP", a generic term that
includes the PC as the principal component of the INP, supra. In failing to
categorically restrict the application of Section 89 as the members of
legislature are said to have intended, it gave rise to the presumption that it has
not limited nor intended to limit the meaning of the word when the bill was
finally passed into law. It is not difficult for the court to also presume that in
drafting the wording of the PNP Law, the legislators were aware of the
historical legislative origin of the "INP".

xxx xxx xxx

The court takes particular note of the fact that Section 89 is found in the
Transitory Provisions of the law which do not provide for any distinction
between the former PC officers and those belonging to the civilian police
forces. These provision are specifically enacted to regulate the period covering
the dissolution of the PC and the creation of the PNP, a period that necessarily
would be attended by imbalances and or confusion occasioned by the
wholesale and mass integration. In fact, the retirement payment scheme of the
INP is still to be formulated, leaving the impression that nothing is really settled
until after the transition of four years has lapsed. Section 89 therefore prevails
over Section 39 up to the year 1995 when the retirement age for the members
of the PNP shall then be age 56; after the year 1995, Section 39 shall then be
the applicable law on retirement of PNP members. (Rollo, pp. 27-28; emphasis
supplied)

Petitioners disagree and claim that the use of the term INP in Sec. 89 does not imply the
same meaning contemplated under PD 765 wherein it is provided:
 Sec. 1. Constitution of the Integrated National Police. — There is hereby
established and constituted the Integrated National Police (INP) which shall be
composed of the Philippine Constabulary as the nucleus, and the integrated
police forces as established by Presidential Decrees
Nos. 421, 482, 531, 585 and 641, as components, under the Department of
National Defense.

On the other hand, private respondents assert that being the nucleus of the Integrated
National Police (INP) under PD 765, former members of the Philippine Constabulary (PC)
should not be discriminated against from the coverage of the term "INP" in Sec. 89, RA
6975. Clearly, it is argued, the term "INP" found in Section 89 of RA 6975 refers to the INP
in PD 765. Thus, where the law does not distinguish, the courts should not distinguish.

Does the law, RA 6975, distinguish INP from the PC? Petitioners submit that it does and cite
Sections 23 and 85 to stress the point, viz.:

Sec. 23. Composition. — Subject to the limitations provided for in this Act, the
Philippine National Police, hereinafter referred to as the PNP, is hereby
established, initially consisting of the members of the police forces who were
integrated into the Integrated National Police (INP) pursuant to Presidential
Decree No. 765, and the officers and enlisted personnel of the Philippine
Constabulary (PC). . .

xxx xxx xxx

The permanent civilian employees of the present PC, INP, Narcotics

Command, CIS and the technical command of the AFP assigned with the PC,
including NAPOLCOM hearing officers holding regular items as such, shall be
absorbed by the Department as employees thereof, subject to existing laws
and regulations.

xxx xxx xxx

Sec. 85. Phase of Implementation. — The implementation of this Act shall be

undertaken in three (3) phases, to wit:

Phase I — Exercise of option by the uniformed members of the Philippine

Constabulary, the PC elements assigned with the Narcotics Command, CIS,
and the personnel of the technical services of the AFP assigned with the PC to
include the regular CIS investigating agents and the operatives and agents of
the NAPOLCOM Inspection, Investigation and Intelligence Branch, and the
personnel of the absorbed National Action Committee on Anti-Hijacking
(NACAH) of the Department of National Defense, to be completed within six
(6) months from the date of the effectivity of this Act. At the end of this phase,
all personnel from the INP, PC, technical Services, NACAH, and NAPOLCOM
Inspection, Investigation and Intelligence Branch shall have been covered by
official orders assigning them to the PNP . . .

xxx xxx xxx

. . . Any PC-INP officer or enlisted personnel may, within the twelve-month

period from the effectivity of this Act, retire . . .
 Phase III — . . . To accomplish the tasks of Phase III, the Commission shall
create a Board of Officers composed of the following: NAPOLCOM
Commissioner as Chairman and one (1) representative each from the PC,
INP, Civil Service Commission and the Department of Budget and
Management.

Section 86 of the same law further provides:

Sec. 86. Assumption by the PNP of Police Functions. — The PNP shall absorb
the functions of the PC, the INP and the Narcotics Command upon the
effectivity of this Act.

From a careful perusal of the above provisions, it appears therefore that the use of the term
INP is not synonymous with the PC. Had it been otherwise, the statute could have just made
a uniform reference to the members of the whole Philippine National Police (PNP) for
retirement purposes and not just the INP. The law itself distinguishes INP from the PC and it
cannot be construed that "INP" as used in Sec. 89 includes the members of the PC.

And contrary to the pronouncement of respondent judge that the law failed to define who
constitutes the INP, Sec. 90 of RA 6975 has in fact defined the same. Thus,

Sec. 90. Status of Present NAPOLCOM, PC-INP. — Upon the effectivity of this

Act, the present National Police Commission and the Philippine Constabulary-
Integrated National Police shall cease to exist. The Philippine Constabulary,
which is the nucleus of the Philippine Constabulary-Integrated National Police
shall cease to be a major service of the Armed Forces of the Philippines. The
Integrated National Police, which is the civilian component of the Philippine
Constabulary-Integrated National Police, shall cease to be the national police
force and lieu thereof, a new police force shall be established and constituted
pursuant to this Act. (emphasis supplied)

It is not altogether correct to state, therefore, that the legislature failed to define who the
members of the INP are. In this regard, it is of no moment that the legislature failed to
categorically restrict the application of the transition period in Sec. 89 specifically in favor of
the local police forces for it would be a mere superfluity as the PC component of the INP
was already retirable at age fifty-six (56).

Having defined the meaning of INP, the trial court need not have belabored on the supposed
dubious meaning of the term. Nonetheless, if confronted with such a situation, courts are not
without recourse in determining the construction of the statute with doubtful meaning for
they may avail themselves of the actual proceedings of the legislative body. In case of doubt
as to what a provision of a statute means, the meaning put to the provision during the
legislative deliberations may be adopted (De Villa v. Court of Appeals,
195 SCRA 722 [1991] citing Palanca v. City of Manila, 41 Phil. 125 [1920]; Arenas v. City of
San Carlos, 82 SCRA 318 [1978]).

Courts should not give a literal interpretation to the letter of the law if it runs counter to the
legislative intent (Yellow Taxi and Pasay Transportation Workers' Association v. Manila
Yellow Taxi Cab. Co., 80 Phil. 83 [1948]).

Examining the records of the Bicameral Conference Committee, we find that the legislature
did intent to exclude the members of the PC from the coverage of Sec. 89 insofar as the
retirement age is concerned, thus:
THE CHAIRMAN. (SEN. MACEDA). Well, it seems what people really want is
one common rule, so if it is fifty-six, fifty-six; of course, the PC wants sixty for
everybody. Of course, it is not acceptable to us in the sense that we tied this
up really to the question of: If you are lax in allowing their (the PC) entry into
the PNP, then tighten up the retirement. If we will be strict in, like requiring
examinations and other conditions for their original entry, then since we have
sifted out a certain amount of undesirables, then we can allow a longer
retirement age. That was the rationale, that was the tie-up. Since we are
relaxing the entry, we should speed up . . .

THE CHAIRMAN. (REP. GUTANG). Exit.

THE CHAIRMAN. (SEN. MACEDA) . . . the retirement, the exit.

THE CHAIRMAN. (REP. GUTANG). So let me get it very clear, Mr. Chairman.
Fifty-six, let's say, that will not make any adjustment in the PC because there
(they) are (retirable at age) fifty-six.

THE CHAIRMAN. (SEN. MACEDA). Kaya nga, wala na silang masasabi.

THE CHAIRMAN. (REP. GUTANG). In the case of the Police, since they are
retireable now at sixty, for the officers, it will be
applicable to them on a one-year every year basis for a total period of four
years transition. (Bicameral Conference Committee on National Defense,
March 12, 1990)

REP. GUTANG. On the first year of effectivity, the police will retire at 60 years.

THE CHAIRMAN. (SEN. MACEDA). Sixty.

REP. GUTANG. On the second year, 59.

THE CHAIRMAN. (SEN. MACEDA). Oo.

REP. GUTANG. On the third year, 58.

THE CHAIRMAN. (SEN. MACEDA). Fifty-eight. So 'yung 55, on the third year,
58, doon siya re-retire.

REP. GUTANG. Oo.

SEN. SAGUISAG. So kung 55, when the law becomes effective . . .

THE CHAIRMAN. (SEN. MACEDA). He will retire at 58, doon siya aabot.

REP. UNICO. Pwede.

SEN. SAGUISAG. Dahil 'yon, may time to . . .

THE CHAIRMAN. (SEN. MACEDA). Walang problema dito sa transition ng

pulis, acceptable ito, eh.

THE CHAIRMAN. (REP. COJUANGCO). Sa PC?

 THE CHAIRMAN. (SEN. MACEDA). PC, walang mawawala sa kanila, 56 ang
retirement age nilang talaga, eh. Kaya ayaw ko
ngang dagdagan 'yung 56 nila at 'yon din ang sa Armed Forces, 56. (Ibid.,
May 22, 1990)

In applying the provisions of Sec. 89 in favor of the local police force as established in PD
765, the Court does not, in any manner, give any
undue preferential treatment in favor of the other group. On the contrary, the Court is merely
giving life to the real intent of the legislators based on the deliberations of the Bicameral
Conference Committee that preceded the enactment of RA 6975.

The legislative intent to classify the INP in such manner that Section 89 of RA 6975 is
applicable only to the local police force is clear. The question now is whether the
classification is valid. The test for this is reasonableness such that it must conform to the
following requirements: (1) It must be based upon substantial distinctions; (2) It must be
germane to the purpose of the law; (3) It must not be limited to existing conditions only; (4) It
must apply equally to all members of the same class (People vs. Cayat, 68 Phil. 12 [1939]).

The classification is based upon substantial distinctions. The PC, before the effectivity of the
law (RA 6975), were already retirable at age 56 while the local police force were retirable at
60, and governed by different laws
(P.D. 1184, Sec. 33 and Sec. 50). The distinction is relevant for the purpose of the statute,
which is to enable the local police force to plan for their retirement which would be earlier
than usual because of the new law. Section 89 is merely transitory, remedial in nature, and
loses its force and effect once the four-year transitory period has elapsed. Finally, it applies
not only to some but to all local police officers.

It may be appropriate to state at this point that it seems absurd that a law will grant an
extension to PC officers' retirable age from 56 to 60 and then gradually lower it back to 56
without any cogent reason at all. Why should the retirement age of PC officers be increased
during the transitory period to the exclusion of other PC officers who would retire at age 56
after such period? Such absurdity was never contemplated by the law and would defeat its
purpose of providing a uniform retirement age for PNP members.

WHEREFORE, the petition is GRANTED. The writ of injunction issued on January 8, 1992 is
hereby LIFTED and the assailed decision of respondent judge is REVERSED and SET
ASIDE.

SO ORDERED.

Narvasa, C.J., Cruz, Feliciano, Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo,
Quiason, Puno, Vitug and Kapunan, JJ., concur.

Nocon, J., is on leave.

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 108524 November 10, 1994

MISAMIS ORIENTAL ASSOCIATION OF COCO TRADERS, INC., petitioner,

vs.
DEPARTMENT OF FINANCE SECRETARY, COMMISSIONER OF THE BUREAU OF
INTERNAL REVENUE (BIR), AND REVENUE DISTRICT OFFICER, BIR MISAMIS
ORIENTAL, respondents.

Damasing Law Office for petitioner.

MENDOZA, J.:

This is a petition for prohibition and injunction seeking to nullify Revenue Memorandum
Circular No. 47-91 and enjoin the collection by respondent revenue officials of the Value
Added Tax (VAT) on the sale of copra by members of petitioner organization. 1

Petitioner Misamis Oriental Association of Coco Traders, Inc. is a domestic corporation

whose members, individually or collectively, are engaged in the buying and selling of copra
in Misamis Oriental. The petitioner alleges that prior to the issuance of Revenue
Memorandum Circular 47-91 on June 11, 1991, which implemented VAT Ruling 190-90,
copra was classified as agricultural food product under $ 103(b) of the National Internal
Revenue Code and, therefore, exempt from VAT at all stages of production or distribution.

Respondents represent departments of the executive branch of government charged with

the generation of funds and the assessment, levy and collection of taxes and other imposts.

The pertinent provision of the NIRC states:

Sec. 103. Exempt Transactions. — The following shall be exempt from the

value-added tax:
 (a) Sale of nonfood agricultural, marine and forest products in their original
state by the primary producer or the owner of the land where the same are
produced;

(b) Sale or importation in their original state of agricultural and marine food
products, livestock and poultry of a kind generally used as, or yielding or
producing foods for human consumption, and breeding stock and genetic
material therefor;

Under §103(a), as above quoted, the sale of agricultural non-food products in their original
state is exempt from VAT only if the sale is made by the primary producer or owner of the
land from which the same are produced. The sale made by any other person or entity, like a
trader or dealer, is not exempt from the tax. On the other hand, under §103(b) the sale of
agricultural food products in their original state is exempt from VAT at all stages of
production or distribution regardless of who the seller is.

The question is whether copra is an agricultural food or non-food product for purposes of
this provision of the NIRC. On June 11, 1991, respondent Commissioner of Internal
Revenue issued the circular in question, classifying copra as an agricultural non-food
product and declaring it "exempt from VAT only if the sale is made by the primary producer
pursuant to Section 103(a) of the Tax Code, as amended." 2

The reclassification had the effect of denying to the petitioner the exemption it previously
enjoyed when copra was classified as an agricultural food product under §103(b) of the
NIRC. Petitioner challenges RMC No. 47-91 on various grounds, which will be presently
discussed although not in the order raised in the petition for prohibition.

First. Petitioner contends that the Bureau of Food and Drug of the Department of Health and
not the BIR is the competent government agency to determine the proper classification of
food products. Petitioner cites the opinion of Dr. Quintin Kintanar of the Bureau of Food and
Drug to the effect that copra should be considered "food" because it is produced from
coconut which is food and 80% of coconut products are edible.

On the other hand, the respondents argue that the opinion of the BIR, as the government
agency charged with the implementation and interpretation of the tax laws, is entitled to
great respect.

We agree with respondents. In interpreting §103(a) and (b) of the NIRC, the Commissioner
of Internal Revenue gave it a strict construction consistent with the rule that tax exemptions
must be strictly construed against the taxpayer and liberally in favor of the state. Indeed,
even Dr. Kintanar said that his classification of copra as food was based on "the broader
definition of food which includes agricultural commodities and other components used in the
manufacture/processing of food." The full text of his letter reads:

10 April 1991

Mr. VICTOR A. DEOFERIO, JR.

Chairman VAT Review Committee
Bureau of Internal Revenue
Diliman, Quezon City

Dear Mr. Deoferio:

 This is to clarify a previous communication made by this Office about copra in
a letter dated 05 December 1990 stating that copra is not classified as food.
The statement was made in the context of BFAD's regulatory responsibilities
which focus mainly on foods that are processed and packaged, and thereby
copra is not covered.

However, in the broader definition of food which include agricultural

commodities and other components used in the manufacture/ processing of
food, it is our opinion that copra should be classified as an agricultural food
product since copra is produced from coconut meat which is food and based
on available information, more than 80% of products derived from copra are
edible products.

Very truly
yours,

QUINTIN
L.
KINTANA
R, M.D.,
Ph.D.
Director
Assistant
Secretary
of Health
for
Standards
and
Regulation
s

Moreover, as the government agency charged with the enforcement of the law, the opinion
of the Commissioner of Internal Revenue, in the absence of any showing that it is plainly
wrong, is entitled to great weight. Indeed, the ruling was made by the Commissioner of
Internal Revenue in the exercise of his power under § 245 of the NIRC to "make rulings or
opinions in connection with the implementation of the provisions of internal revenue
laws, including rulings on the classification of articles for sales tax and similar purposes."

Second. Petitioner complains that it was denied due process because it was not heard
before the ruling was made. There is a distinction in administrative law between legislative
rules and interpretative rules. 3 There would be force in petitioner's argument if the circular in
question were in the nature of a legislative rule. But it is not. It is a mere interpretative rule.

The reason for this distinction is that a legislative rule is in the nature of subordinate
legislation, designed to implement a primary legislation by providing the details thereof. In
the same way that laws must have the benefit of public hearing, it is generally required that
before a legislative rule is adopted there must be hearing. In this connection, the
Administrative Code of 1987 provides:

Public Participation. — If not otherwise required by law, an agency shall, as far

as practicable, publish or circulate notices of proposed rules and afford
interested parties the opportunity to submit their views prior to the adoption of
any rule.
 (2) In the fixing of rates, no rule or final order shall be valid unless the
proposed rates shall have been published in a newspaper of general
circulation at least two (2) weeks before the first hearing thereon.

(3) In case of opposition, the rules on contested cases shall be observed. 4

In addition such rule must be published. 5 On the other hand, interpretative rules are
designed to provide guidelines to the law which the administrative agency is in charge of
enforcing.

Accordingly, in considering a legislative rule a court is free to make three inquiries: (i)
whether the rule is within the delegated authority of the administrative agency; (ii) whether it
is reasonable; and (iii) whether it was issued pursuant to proper procedure. But the court is
not free to substitute its judgment as to the desirability or wisdom of the rule for the
legislative body, by its delegation of administrative judgment, has committed those
questions to administrative judgments and not to judicial judgments. In the case of an
interpretative rule, the inquiry is not into the validity but into the correctness or propriety of
the rule. As a matter of power a court, when confronted with an interpretative rule, is free to
(i) give the force of law to the rule; (ii) go to the opposite extreme and substitute its
judgment; or (iii) give some intermediate degree of authoritative weight to the interpretative
rule. 6

In the case at bar, we find no reason for holding that respondent Commissioner erred in not
considering copra as an "agricultural food product" within the meaning of § 103(b) of the
NIRC. As the Solicitor General contends, "copra per se is not food, that is, it is not intended
for human consumption. Simply stated, nobody eats copra for food." That previous
Commissioners considered it so, is not reason for holding that the present interpretation is
wrong. The Commissioner of Internal Revenue is not bound by the ruling of his
predecessors. 7 To the contrary, the overruling of decisions is inherent in the interpretation
of laws.

Third. Petitioner likewise claims that RMC No. 47-91 is discriminatory and violative of the
equal protection clause of the Constitution because while coconut farmers and copra
producers are exempt, traders and dealers are not, although both sell copra in its original
state. Petitioners add that oil millers do not enjoy tax credit out of the VAT payment of
traders and dealers.

The argument has no merit. There is a material or substantial difference between coconut
farmers and copra producers, on the one hand, and copra traders and dealers, on the other.
The former produce and sell copra, the latter merely sell copra. The Constitution does not
forbid the differential treatment of persons so long as there is a reasonable basis for
classifying them differently. 8

It is not true that oil millers are exempt from VAT. Pursuant to § 102 of the NIRC, they are
subject to 10% VAT on the sale of services. Under § 104 of the Tax Code, they are allowed
to credit the input tax on the sale of copra by traders and dealers, but there is no tax credit if
the sale is made directly by the copra producer as the sale is VAT exempt. In the same
manner, copra traders and dealers are allowed to credit the input tax on the sale of copra by
other traders and dealers, but there is no tax credit if the sale is made by the producer.

Fourth. It is finally argued that RMC No. 47-91 is counterproductive because traders and
dealers would be forced to buy copra from coconut farmers who are exempt from the VAT
and that to the extent that prices are reduced the government would lose revenues as the
10% tax base is correspondingly diminished.

This is not so. The sale of agricultural non-food products is exempt from VAT only when
made by the primary producer or owner of the land from which the same is produced, but in
the case of agricultural food products their sale in their original state is exempt at all stages
of production or distribution. At any rate, the argument that the classification of copra as
agricultural non-food product is counterproductive is a question of wisdom or policy which
should be addressed to respondent officials and to Congress.

WHEREFORE, the petition is DISMISSED.

SO ORDERED.

Narvasa, C.J., Regalado and Puno, JJ., concur.

#Footnotes

1 The value-added tax is a percentage tax on the sale, barter, exchange or

importation of goods or services. (NIRC, §99) Insofar as the sale, barter or
exchange of goods is concerned, the tax is equivalent to 10% of the gross
selling price or gross value in money of the goods sold, bartered or
exchanged, such tax to be paid by the seller or transferor. (§ 100(a)) The tax is
determined as follows:

(d) Determination of the tax. — (1) Tax billed as separate item in the invoice. If

the tax is billed as a separate item in the invoice, the tax shall be based on the
gross selling price, excluding the tax. "Gross selling price" means the total
amount of money or its equivalent which the purchaser pays or is obligated to
pay to the seller in the consideration of the sale, barter or exchange of the
goods, excluding the value-added tax. The excise tax, if any, on such goods
shall form part of the gross selling price.

(2) Tax not billed separately or is billed erroneously in the

invoice. — In case the tax is not billed separately or is billed erroneously in the
invoice, the tax shall be determined by multiplying the gross selling price,
including the amount intended by the seller to cover the tax or the tax billed
erroneously, by the factor 1/11 or such factor as may be prescribed by
regulations in case of persons partially exempt under special laws.

(3) Sales returns, allowances and sales discounts. — The value of goods sold
and subsequently returned or for which allowances were granted by a VAT-
registered person may be deducted from the gross sales or receipts for the
quarter in which a refund is made or a credit memorandum or refund is issued.
Sales discounts granted and indicated in the invoice at the time of sale may be
excluded from the gross sales within the same quarter. (§100(d))

2 This circular is based on VAT Ruling No. 190-90 dated August 17, 1990
which revoked VAT Ruling No. 009-88 and VAT Ruling No. 279-88, June 30,
1988, classifying copra as an agricultural food product.
3 See Victorias Milling Co. v. Social Security Commission, 114 Phil. 555
(1962); Philippine Blooming Mills v. Social Security System, 124 Phil. 499
(1966).

4 Bk. VII, Ch. 2, § 9.

5 Tañada v. Tuvera, 146 SCRA 446 (1986). See Victorias Milling Co. v.

SSC, supra note 3.

6 K. DAVIS, Administrative Law 116 (1965).

7 Petitioner's claim that RMC No. 47-91 erroneously revoked irrelevant VAT
rulings of the BIR is not correct. RMC No. 47-91 revoked VAT Rulings No.
009-88 and No. 279-88, which dealt with the question whether copra is an
agricultural food or non-food product. VAT ruling No. 009-88 held that "copra
as an agricultural product is exempt from VAT in all stages of distribution." On
the other hand, VAT Ruling No. 279-88 treated "copra . . . as an agricultural
food product in its original state" and, therefore, "exempt from VAT under
Section 103(b) of the TAX Code, as amended by EO 273 regardless of
whether the sale is made by producer or subsequent sale."

8 Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163

SCRA 371 (1988) (sustaining the validity of E.O. 273 adopting the VAT);
Sison, Jr. v. Ancheta, 130 SCRA 653 (1984) (sustaining the validity of B.P.
Blg. 135 providing for taxable income taxation).
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-36049 May 31, 1976

CITY OF NAGA, VICENTE P. SIBULO, as Mayor, and JOAQUIN C. CLEOPE, as

Treasurer of the City of Naga, petitioners,
vs.
CATALINO AGNA, FELIPE AGNA and SALUD VELASCO, respondents.

Ernesto A. Miguel for petitioners.

Bonot, Cledera & Associates for respondents.

MARTIN, J.:

Petition for review on certiorari, which We treat as special civil action, of the decision of the
Court of First Instance of Camarines Sur in Civil Case No. 7084, entitled Agna, et al. versus
City of Naga, et al., declaring Ordinance No. 360 of the City of Naga enforceable in 1971 the
year following its approval and requiring petitioners to pay to private respondents the
amounts sought for in their complaint plus attorney's fees and costs. Included in the present
controversy as proper parties are Vicente P. Sibulo and Joaquin C. Cleope, the City Mayor
and City Treasurer of the City of Naga, respectively.

On June 15, 1970, the City of Naga enacted Ordinance No. 360 changing and amending the
graduated tax on quarterly gross sales of merchants prescribed in Section 3 of Ordinance
No. 4 of the City of Naga to percentage tax on gross sales provided for in Section 2 thereof.
Pursuant to said ordinance, private respondents paid to the City of Naga the following taxes
on their gross sales for the quarter from July 1, 1970 to September 30, 1970, as follows:

Catalino Agna paid P1,805.17 as per Official Receipt No. 1826591;

Felipe Agna paid P625.00 as per Official Receipt No. 1826594; and
 Salud Velasco paid P129.81 as per Official Receipt No. 1820339.

On February 13, 1971, private respondents filed with the City Treasurer of the City of Naga
a claim for refund of the following amounts, together with interests thereon from the date of
payments: To Catalino Agna, P1,555.17; to Felipe Agna, P560.00; and to Salud Velasco,
P127.81, representing the difference between the amounts they paid under Section 3,
Ordinance No. 4 of the City of Naga, i.e., P250.00; P65.00 and P12.00 respectively. They
alleged that under existing law, Ordinance No. 360, which amended Section 3, Ordinance
No. 4 of the City of Naga, did not take effect in 1970, the year it was approved but in the
next succeeding year after the year of its approval, or in 1971, and that therefore, the taxes
they paid in 1970 on their gross sales for the quarter from July 1, 1970 to September 30,
1970 were illegal and should be refunded to them by the petitioners.

The City Treasurer denied the claim for refund of the amounts in question. So private
respondents filed a complaint with the Court of First Instance of Naga (Civil Case No. 7084),
seeking to have Ordinance No. 360 declared effective only in the year following the year of
its approval, that is, in 1971; to have Sections 4, 6 and 8 of Ordinance No. 360 declared
unjust, oppressive and arbitrary, and therefore, null and void; and to require petitioners to
refund the sums being claimed with interests thereon from the date the taxes complained of
were paid and to pay all legal costs and attorney's fees in the sum of P1,000.00. Private
respondents further prayed that the petitioners be enjoined from enforcing Ordinance No.
360.

In their answer, the petitioners among other things, claimed that private respondents were
not "compelled" but voluntarily made the payments of their taxes under Ordinance No. 360;
that the said ordinance was published in accordance with law; that in accordance with
Republic Act No. 305 (Charter of the City of Naga) an ordinance takes effect after the tenth
day following its passage unless otherwise stated in said ordinance; that under existing law
the City of Naga is authorized to impose certain conditions to secure and accomplish the
collection of sales taxes in the most effective manner. As special and affirmative defenses,
the petitioners allege that the private respondents have no cause of action against them;
that granting that the collection of taxes can be enjoined. the complaint does not allege facts
sufficient to justify the issuance of a writ of preliminary injunction; that the refund prayed for
by the private respondents is untenable; that petitioners Vicente P. Sibulo and Joaquin C.
Cleope, the City Mayor and Treasurer of the City of Naga, respectively are not proper
parties in interest; that the private respondents are estopped from questioning the validity
and/or constitutionality of the provisions of Ordinance No. 360. Petitioners counterclaimed
for P20,000.00 as exemplary damages, for the alleged unlawful and malicious filing of the
claim against them, in such amount as the court may determine.

During the hearing of the petition for the issuance of a writ of preliminary injunction and at
the pre-trial conference as well as at the trial on the merits of the case, the parties agreed on
the following stipulation of facts: That on June 15, 1970, the City Board of the City of Naga
enacted Ordinance No. 360 entitled "An ordinance repealing Ordinance No. 4, as amended,
imposing a sales tax on the quarterly sales or receipts on all businesses in the City of
Naga," which ordinance was transmitted to the City Mayor for approval or veto on June 25,
1970; that the ordinance was duly posted in the designated places by the Secretary of the
Municipal Board; that private respondents voluntarily paid the gross sales tax, pursuant to
Ordinance No. 360, but that on February 15, 1971, they filed a claim for refund with the City
Treasurer who denied the same.

On October 9, 1971, the respondent Judge rendered judgment holding that Ordinance No.
360, series of 1970 of the City of Naga was enforceable in the year following the date of its
approval, that is, in 1971 and required the petitioners to reimburse the following sums, from
the date they paid their taxes to the City of Naga: to Catalino Agna, the sum of P1,555.17; to
Felipe Agna, P560.00; and to Salud Velasco, P127.81 and the corresponding interests from
the filing of the complaint up to the reimbursement of the amounts plus the sum of P500.00
as attorney's fees and the costs of the proceedings.

Petitioners' submit that Ordinance No. 360, series of 1970 of the City of Naga, took effect in
the quarter of the year of its approval, that is in July 1970, invoking Section 14 of Republic
Act No. 305, 1 as amended, otherwise known as the Charter of the City of Naga, which,
among others, provides that "Each approved ordinance ... shall take effect and be enforced
on and after the 10th day following its passage unless otherwise stated in said ordinance ...
". They contend that Ordinance No. 360 was enacted by the Municipal Board of the City of
Naga on June 15, 1970 2 and was transmitted to the City Mayor for his approval or veto on
June 25, 1970 3 but it was not acted upon by the City Mayor until August 4, 1970. Ordinarily,
pursuant to Section 14 of Republic Act No. 305, said ordinance should have taken effect
after the 10th day following its passage on June 15, 1970, or on June 25, 1970. But because
the ordinance itself provides that it shall take effect upon its approval, it becomes necessary
to determine when Ordinance No. 360 was deemed approved. According to the same
Section 14 of Republic Act No. 305, "if within 10 days after receipt of the ordinance the
Mayor does not return it with his veto or approval 4 the ordinance is deemed approved."
Since the ordinance in question was not returned by the City Mayor with his veto or approval
within 10 days after he received it on June 25, 1970, the same was deemed approved after
the lapse of ten (10) days from June 25, 1970 or on July 6, 1970. On this date, the
petitioners claim that Ordinance No. 360 became effective. They further contend that even
under Section 2, of Republic Act No. 2264 (Local Autonomy Acts) 5 which expressly
provides: "A tax ordinance shall go into effect on the fifteenth day after its passage unless
the ordinance shall provide otherwise', Ordinance No. 360 could have taken effect on June
30, 1970, which is the fifteenth day after its passage by the Municipal Board of the City of
Naga on June 15, 1970, or as earlier explained, it could have taken effect on July 6, 1970,
the date the ordinance was deemed approved because the ordinance itself provides that it
shall take effect upon its approval. Of the two provisions invoked by petitioners to support
their stand that the ordinance in question took effect in the year of its approval, it is Section
2 of Republic Act No. 2264 (Local Autonomy Act) that is more relevant because it is the
provision that specifically refers to effectivity of a tax ordinance and being a provision of
much later law it is deemed to have superseded Section 14 of Republic Act No. 305
(Charter of the City of Naga) in so far as effectivity of a tax ordinance is concerned.

On the other hand, private respondents contend that Ordinance No. 360 became effective
and enforceable in 1971, the year following the year of its approval, invoking Section 2309
of the Revised Administrative Code which provides:

Section 2309. Imposition of tax and duration of license.—A municipal license

tax already in existence shall be subject to change only by ordinance enacted
prior to the 15th day of December of any year after the next succeeding year,
but an entirely new tax may be created by any ordinance enacted during the
quarter year effective at the beginning of any subsequent quarter.

They submit that since Ordinance No. 360, series of 1970 of the City of Naga, is one which
changes the existing graduated sales tax on gross sales or receipts of dealers of
merchandise and sari-sari merchants provided for in Ordinance No. 4 of the City of Naga to
a percentage tax on their gross sales prescribed in the questioned ordinance, the same
should take effect in the next succeeding year after the year of its approval or in 1971.
Evidently, the divergence of opinion as to when Ordinance No. 360 took effect and became
enforceable is mainly due to the seemingly apparent conflict between Section 2309 of the
Revised Administrative Code and Section 2 of Republic Act No. 2264 (Local Autonomy Act).
Is there really such a conflict in the above-mentioned provisions? It will be easily noted that
Section 2309 of the Revised Administrative Code contemplates of two types of municipal
ordinances, namely: (1) a municipal ordinance which changes a municipal license tax
already in existence and (2) an ordinance which creates an entirely new tax. Under the first
type, a municipal license tax already in existence shall be subject to change only by an
ordinance enacted prior to the 15th day of December of any year after the next succeeding
year. This means that the ordinance enacted prior to the 15th day of December changing or
repealing a municipal license tax already in existence will have to take effect in next
succeeding year. The evident purpose of the provision is to enable the taxpayers to adjust
themselves to the new charge or burden brought about by the new ordinance. This is
different from the second type of a municipal ordinance where an entirely new tax may be
created by any ordinance enacted during the quarter year to be effective at the beginning of
any subsequent quarter. We do not find any such distinction between an ordinance which
changes a municipal license tax already in existence and an ordinance creating an entirely
new tax in Section 2 of Republic Act No. 2264 (Local Autonomy Act) which merely refers to
a "tax ordinance" without any qualification whatsoever.

Now to the meat of the problem in this petition. Is not Section 2309 of the Revised
Administrative Code deemed repealed or abrogated by Section 2 of Republic Act No. 2264
(Local Autonomy Act) in so far as effectivity of a tax ordinance is concerned? An
examination of Republic Act No. 2264 (Local Autonomy Act) fails to show any provision
expressly repealing Section 2309 of the Revised Administrative Code. All that is mentioned
therein is Section 9 which reads:

Section 9 — All acts, executive orders, administrative orders, proclamations or

parts thereof, inconsistent with any of the provisions of this Act are hereby
repealed and modified accordingly.

The foregoing provision does not amount to an express repeal of Section 2309 of the
Revised Administrative Code. It is a well established principle in statutory construction that a
statute will not be construed as repealing prior acts on the same subject in the absence of
words to that effect unless there is an irreconcilable repugnancy between them, or unless
the new law is evidently intended to supersede all prior acts on the matter in hand and to
comprise itself the sole and complete system of legislation on that subject. Every new
statute should be construed in connection with those already existing in relation to the same
subject matter and all should be made to harmonize and stand together, if they can be done
by any fair and reasonable interpretation ... . 6 It will also be noted that Section 2309 of the
Revised Administrative Code and Section 2 of Republic Act No. 2264 (Local Autonomy Act)
refer to the same subject matter-enactment and effectivity of a tax ordinance. In this respect
they can be considered in pari materia. Statutes are said to be in pari materia when they
relate to the same person or thing, or to the same class of persons or things, or have the
same purpose or object. 7 When statutes are in pari materia, the rule of statutory
construction dictates that they should be construed together. This is because enactments of
the same legislature on the same subject matter are supposed to form part of one uniform
system; that later statutes are supplementary or complimentary to the earlier enactments
and in the passage of its acts the legislature is supposed to have in mind the existing
legislation on the same subject and to have enacted its new act with reference
thereto. 8 Having thus in mind the previous statutes relating to the same subject matter,
whenever the legislature enacts a new law, it is deemed to have enacted the new provision
in accordance with the legislative policy embodied in those prior statutes unless there is an
express repeal of the old and they all should be construed together. 9 In construing them the
old statutes relating to the same subject matter should be compared with the new provisions
and if possible by reasonable construction, both should be so construed that effect may be
given to every provision of each. However, when the new provision and the old relating to
the same subject cannot be reconciled the former shall prevail as it is the latter expression
of the legislative will. 10 Actually we do not see any conflict between Section 2309 of the
Revised Administrative Code and Section 2 of the Republic Act No. 2264 (Local Autonomy
Act). The conflict, if any, is more apparent than real. It is one that is not incapable of
reconciliation. And the two provisions can be reconciled by applying the first clause of
Section 2309 of the Revised Administrative Code when the problem refers to the effectivity
of an ordinance changing or repealing a municipal license tax already in existence. But
where the problem refers to effectivity of an ordinance creating an entirely new tax, let
Section 2 of Republic Act No. 2264 (Local Autonomy Act) govern.

In the case before Us, the ordinance in question is one which changes the graduated sales
tax on gross sales or receipts of dealers of merchandise and sari-sari merchants prescribed
in Section 3 of Ordinance No. 4 of the City of Naga to percentage tax on their gross sale-an
ordinance which definitely falls within the clause of Section 2309 of the Revised
Administrative Code. Accordingly it should be effective and enforceable in the next
succeeding year after the year of its approval or in 1971 and private respondents should be
refunded of the taxes they have paid to the petitioners on their gross sales for the quarter
from July 1, 1970 to September 30, 1970 plus the corresponding interests from the filing of
the complaint until reimbursement of the amount.

IN VIEW OF THE FOREGOING, the instant petition is hereby dismissed.

SO ORDERED.

Teehankee (Chairman), Makasiar, Esguerra and Muñoz Palma, JJ., concur.

Footnotes

1 Section 14, RA 305, as amended, otherwise known as the Charter of Naga

City, provides:

Each approved ordinance, resolution or motion shall be sealed with the seal of
the Board, signed by the presiding officer and the secretary of the Board and
recorded in a book for the purpose and shall, on the day following its passage,
be posted by the secretary at the main entrance to the City Hall, and shall take
effect and be in force on and after the tenth day following its passage, unless
otherwise stated in said ordinance, resolution or motion or vetoed by the
Mayor as hereinafter provided. (Emphasis ours)

2 Stipulation of Facts.

3 Stipulation of Facts.

4 See. 14 (RA 305) — Method of transacting business by the Board-Veto-

Authentication and publication of ordinance —
... Within ten days after the receipt of the ordinance, resolution, or motion, the
Mayor shall return it with his approval or veto. If he does not return it within
that time it shall be to be approved, if he returns it with his veto, his reasons
therefor in writing shall accompany it. It may then be again enacted by the
affirmative vetoes of six member of the Board and again forwarded to the
Mayor for his approval, and if within ten days after his receipt he does not
again return it with his veto, it shall be deemed to be approved. If within said
time he again returns it with his veto, it shall be forwarded forthwith to the
Secretary of the Interior for his approval or disapproval, which shall be final."
(Emphasis ours.)

5 Sec. 2, Republic Act 2264, otherwise known as the Local Autonomy Act,
provides:

Section 2. (Republic Act No. 2264) Taxation—Any provision of law to the

contrary notwithstanding, all chartered cities, municipalities and municipal
districts shall have authority to impose municipal license taxes or fees upon
persons engaged in any occupation or business ...

A tax ordinance shall go into effect on the fifteenth day after its p , unless the
ordinance shall provide otherwise: Provided, however, that the Secretary of
Finance shall have authority to suspend the effectivity of any ordinance within
one hundred and twenty days after its passage, if, in his opinion the tax or fees
therein levied, or imposed is unjust, excessive, oppressive, or confiscatory,
and when the said secretary exercises this authority the effectivity or such
ordinance shall be suspended. (emphasis ours)

6 Black on Interpretation of Laws, p. 351.

7 Sutherland Statutory Construction, Vol. 11, pp. 535- 536.

8 Black on Interpretation of Laws, See. 106.

9 Ibid

10 Sutherland Statutory Construction, Vol. 11, p. 529.