Case Digest (G.R. No. 256907) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
These consolidated petitions arose from six separate appeals involving three domestic cigarette manufacturers—La Suerte Cigar & Cigarette Factory, Fortune Tobacco Corporation, and Sterling Tobacco Corporation—and the Commissioner of Internal Revenue. Under the 1986 National Internal Revenue Code (“Tax Code”), stemmed leaf tobacco was subject to a specific excise tax of ₱0.75 per kilogram under Section 141, but Section 137 allowed a tax-free sale “in bulk as raw material by one manufacturer directly to another” subject to conditions set by the Department of Finance. From 1986 to 1990, the BIR assessed La Suerte, Fortune, and Sterling for deficiency excise taxes on imported and locally purchased stemmed leaf tobacco and on transfers to third parties, totaling tens of millions of pesos. Each protested: the Court of Tax Appeals (CTA) set aside the assessments and granted La Suerte’s refund claim for its April 1995 importation but denied relief to Fortune and Sterling on separate rul Case Digest (G.R. No. 256907) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Stemmed leaf tobacco and excise tax regime
- Stemmed leaf tobacco is leaf tobacco with its midrib removed; after curing, leaves are re-dried, destemmed, cleaned, cut into strips and aged before use in cigarette manufacture.
- Tax law history:
- 1939 Tax Code (CA 466): Section 132 exempts bulk sale of stemmed leaf tobacco between manufacturers without prepayment; Section 136 imposes P0.60/kg specific tax on “products of tobacco.”
- 1977 Code (PD 1158-A): Sections 144 and 148 retain exemption and impose P0.75/kg specific tax on manufactured or partially prepared tobacco.
- 1986 Code (PD 1994/EO 273): Sections 137 and 141 continue same scheme; Sin Tax Law (RA 10351, 2012) later amends rates.
- Parties, transactions and procedural history
- La Suerte, Fortune and Sterling import and purchase stemmed leaf tobacco (various periods 1986–1995); CIR assesses deficiency excise taxes.
- Cases filed in the Court of Tax Appeals (CTA); various CTA decisions for and against taxpayers; appeals to the Court of Appeals (CA); six petitions consolidated before the Supreme Court:
- G.R. No. 125346 (La Suerte v. CA & CIR)
- G.R. Nos. 136328-29 (CIR v. Fortune)
- G.R. No. 144942 (CIR v. La Suerte)
- G.R. No. 148605 (Sterling v. CIR)
- G.R. No. 158197 (La Suerte v. CIR)
- G.R. No. 165499 (La Suerte v. CIR)
Issues:
- Whether stemmed leaf tobacco is subject to specific tax under Section 141 of the 1986 Tax Code.
- Whether Section 137’s exemption for bulk sale without prepayment applies to all manufacturers or is restricted.
- Whether imported stemmed leaf tobacco falls within the Section 137 exemption.
- Whether Revenue Regulations Nos. V-39 and 17-67 validly define and limit the exemption.
- Whether CIR may collect tax from buyers without first attempting collection from manufacturers.
- Whether later administrative rulings denying exemption violate the principle of non-retroactivity.
- Whether taxing stemmed leaf tobacco and the finished product amounts to prohibited double taxation.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)