Case Digest (G.R. No. L-18354)
Facts:
- Cheng Ban Yek Co., Inc., a domestic corporation, operated the International Oil Factory and manufactured vegetable lard using locally produced coconut oil.
- Between 1953 and 1955, the company imported cottonseed and fish oils for its manufacturing process.
- The Central Bank of the Philippines initially exempted these imports from the 17% special excise tax under Republic Act No. 601, based on the opinion that hydrogenated cottonseed oil was a "stabilizer."
- The Central Bank approved the exemption and refunded P113,219.25 in taxes paid under protest.
- On March 6, 1958, the Central Bank's auditor demanded payment of P185,884.09, including the previously refunded amount, arguing that the oils were not exempt.
- The company refused to pay, leading the auditor to seek a ruling from the Auditor General.
- The Auditor General, after consulting the Secretary of Finance and various scientific opinions, concluded that hydrogenated cottonseed oil was a component, not a stabilizer.
- The Central Bank renewed its tax demand, prompting Cheng Ban Yek Co., Inc. to file a petition for review.
Issue:
- (Unlock)
Ruling:
- The Supreme Court ruled that hydrogenated cottonseed oil used in the manufacture of vegetable lard is a component and not a stabilizer, thus subject to the 17% special excise tax under Republic Act No. 601.
- The Court also held that the opinion rendered by the Auditor ...(Unlock)
Ratio:
- The Supreme Court's decision was based on the technical interpretation of the term "stabilizer" as used in Republic Act No. 601.
- The Court relied on the opinion of the Chairman of the National Science Development Board, who stated that hydrogenated cottonseed oil acts as a component rather than a stabilizer in the manufacture of vegetable lard.
- The Court e...continue reading
Case Digest (G.R. No. L-18354)
Facts:
In the case of Cheng Ban Yek Co., Inc. v. Auditor General, the petitioner, Cheng Ban Yek Co., Inc., a domestic corporation operating the International Oil Factory, was engaged in the manufacture of vegetable lard using locally produced coconut oil. Between 1953 and 1955, the company imported cottonseed and fish oils to Manila for use in its manufacturing process. The Central Bank of the Philippines, through its Office of Exchange Tax Administration, initially held that these imports were exempt from the 17% special excise tax under Republic Act No. 601, as amended. This exemption was based on the Central Bank's legal counsel's opinion that hydrogenated cottonseed oil was considered a "stabilizer" under the Act. Consequently, the Central Bank approved the exemption and refunded P113,219.25 in taxes that had been paid under protest.
However, on March 6, 1958, the auditor of the Central Bank demanded the payment of P185,884.09, representing the 17% special excise tax on the imported oils, including the previously refunded amount. The company refused to comply with this demand, leading the auditor to seek a definitive ruling from the Auditor General on whether hydrogenated cottonseed oil used in vegetable lard production was a "stabilizer" under Republic Act No. 601. The Auditor General consulted the Secretary of Finance, who concluded that the importation did not qualify for the exemption, as the oil was a component rather than a stabilizer. This conclusion was based ...