ACTING COMMISSIONER OF CUSTOMS

V.
MANILA ELECTRIC COMPANY
(77 SCRA 469)

FACTS:
Manila Electric Company is a private respondent, and it claims that it is exempt on paying
IMPORT TAXES not only by the virtue of RA 1394 (Act on import tax on all goods, articles, products
brought into the Philippines), but also the Paragraph 9, Part 2 of its FRANCHISE that expressly exempts
INSULATORS from taxes of whatever kind, additionally the company was granted, to wit, build a
PLANT or conveying and furnishing of electric, heat, and power. Provided that they shall PAY the
government of Manila 2 and ½ per centum of their gross earnings derived from their operations.

INSULATING OILS have a flash point of 285 degrees Fahrenheit and a fire point of 31 degrees
Fahrenheit to be considered SAFE. A clean refined oil will have a minimum of dielectric 22,000 volts, but
with the presence off 0.01 water will REDUCE the strength radically.

ISSUES:
Whether or not, insulating oils are part of insulators.
Whether or not, Manila Electric Company [MERALCO now} is exempt from paying import taxes.

HELD:
The law must be construed “strictissimi juris”. As the law frowns over exemptions on
taxes. Insulating oils are imported by MERALCO, and is used for cooling, as well as insulating, and when
used in oil circuit breakers, they are required to maintain INSULATION.
The decision appealed for not being in accordance with the law is hereby REVERSED. Court of
Tax Appeals construed the law well. Article 10 expressly states that, In case of doubt in the
interpretation and application of laws, it is presumed that the law making body intended right and
justice to prevail. Respondents are ordered to REFUND the sum of Php 995 within 3 days from the date
this decision becomes final. The petition for review is dismissed and no costs.

** DOCTRINE OF STARE DECISIS WAS APPLIED HERE AS THE CASE REFERRED TO PREVIOUS
JURISPRUDENCE.