March 1964 - Philippine Supreme Court Decisions/Resolutions
Philippine Supreme Court Jurisprudence
Philippine Supreme Court Jurisprudence > Year 1964 > March 1964 Decisions >
G.R. No. L-18354 March 31, 1964 - CHENG BAN YEK CO., INC. v. AUDITOR GENERAL:
EN BANC
[G.R. No. L-18354. March 31, 1964.]
CHENG BAN YEK CO., INC., Petitioner, v. AUDITOR GENERAL, Respondent.
Rafael Dinglasan for Petitioner.
Solicitor General for Respondent.
R E S O L U T I O N *
BAUTISTA ANGELO, J.:
Petitioner moves this Court to reconsider its decision rendered on December 29, 1962 wherein it held that the cottonseed oil it imported in the years 1953-1955 for use in the manufacture of lard from coconut oil is a component and not a stabilizer and, therefore, is subject to the 17% special excise tax. In support of its motion, petitioner submitted Annexes A, B, B-1, and B-2.
On February 12, 1963, respondent was required to comment on the motion for reconsideration. Respondent submitted his comment on February 28, 1963 and therein he prayed that the motion be denied for lack of merit. He reiterated the arguments already advanced in his original brief.
In the meantime, petitioner prayed that Annexes A, A-1 to A-3, which are photostatic copies of pertinent pages of Alton E. Bailey’s book "Industrial Oil and Fat Products" be submitted as parts of his motion for reconsideration and, in its reply to respondent’s comment, it also attached certain annexes representing photostatic copies of pertinent pages of books and journals of some authorities to bolster up the arguments advanced therein in refutation of respondent’s comment.
During the oral argument held on April 24, 1963 on the motion for reconsideration, petitioner again asked for leave to submit certain documents which counsel marked as Exhibits AA, BB, X and Y, which petition was granted, and because said documents partake of the nature of new evidence which was submitted in the absence of respondent, the Court in its resolution of May 30, 1963 resolved to remand the case to respondent to give him an opportunity to examine and cross-examine the persons or officials who appear to be the authors or writers thereof and to take whatever action he may deem proper in the premises.
On December 13, 1963, respondent filed his compliance with this Court’s resolution and therein he quoted a memorandum submitted by Deputy Commissioner Flaviano M. Yenko of the National Institute of Science and Technology, which was concurred in by the Chairman of the National Science Development Board, wherein said official made a categorical statement that the views expressed by him as contained in the letter sent to petitioner’s counsel dated January 30, 1963 did not constitute a reversal of the previous opinion rendered by him on the matter under consideration.
The contents of said memorandum read as follows:jgc:chanrobles.com.ph
"We have your memorandum dated September 23, 1963 regarding a query from the Auditor General on the use of hydrogenated cottonseed oil.
"In this connection, please be informed that the views expressed by Mr. Charles Schuh and the undersigned which were endorsed by the Chairman in his letter to Atty. Dinglasan, dated January 30 do not constitute a reversal of the previous technical opinion rendered by this office that in the manufacture of vegetable lard, hydrogenated cottonseed oil serves as a component and not as a stabilizer.
"In the manufacture of vegetable lard, stearine (hydrogenated cottonseed oil) is added to the already stable liquid coconut oil in order to form plastic mixture and afterwards air is incorporated into this stearine-coconut oil mixture to improve its blending properties. From this point of view, stearine cannot be considered a stabilizer.
"While it is true that stearine forms with coconut oil a plastic mass that can keep the entrapped air, the stearine primarily serves to solidify or plasticize this liquid coconut oil, thereby forming a component part of the coconut-stearine plastic mixture.
"The stearine (hydrogenated cottonseed oil) therefore when used in the manufacture of shortening is to be considered as component and not a stabilizer."cralaw virtua1aw library
It should be noted that in said memorandum Commissioner Yenko merely states that the views expressed by him and Mr. Charles Schuh do not constitute a reversal of the previous opinion rendered by him that in the manufacture of vegetable lard hydrogenated cottonseed oil serves as a component and not as stabilizer, but does not refute nor comment on the views expressed by the authors mentioned in the new evidence submitted by petitioner. Some of those views follow:jgc:chanrobles.com.ph
"If an all-vegetable shortening is to be made with a minimum amount of hardened oil, the latter is usually hydrogenated to an iodine value of 15% or less. In the case of a shortening which is to be made entirely of cottonseed oil, about 10% to 15% of hardened oil or vegetable stearine is required in the mixture, the exact amount depending upon the iodine value and titer of the stearine.
"Coconut oil, as stated previously yields a shortening of rather poor plastic range. If coconut oil is to be used in a shortening in large proportions, the product is best made by blending unhydrogenated coconut oil with about 8% to 12% of vegetable stearine and as much cottonseed oil or rather liquid oil as may be permissible to use. Completely hydrogenated coconut oil has a melting point of but 110�F., hence vegetable stearine cannot be made from this oil." (Industrial Oil and Fat Products by Alton E. Bailey, pp. 237-238, Annex "A-3", Petition).
"Stabilizers. In general, any substance which makes a solution, mixture, suspension, or state, etc. more stable. Specifically, there are stabilizers which may retard a reaction rate or preserve a chemical equilibrium, act as anti-oxidants, keep pigments and other components in emulsion form in an emulsion paint, or prevent the particles in a colloidal suspension from precipitating." (Exh. X)
"Coconut oil consists of a complex mixture of the glyceride esters of fatty acids. Analysis show that the amount of unsaturation is low. This may be interpreted as giving the oil a high degree of resistance to the development of oxidative reacidity. This has been verified experimentally by Rodata and Dyogi (2) who found coconut oil 2531 days old to give a negative Kreis test." (Exh. Y)
2.0% hydrogenated cottonseed oil to be used as a stabilizer is not enough to plasticize liquid coconut oil. The general limits for the solid particles shall generally be within the range of 5.0% to 25.0%. In the case of shortening produced in the United States which is to be made entirely of cottonseed oil about 10.0% to 15% of hard oil or vegetable stearine is required in the mixture. In the United States the most commonly used oil for cooking is cottonseed oil in place of coconut oil in the Philippines. If coconut oil is to be used in shortening in large proportion, the product is best made by blending unhydrogenated coconut oil with 8.0% to 12.5% vegetable stearine." (As explained by Alton E. Bailey in his book, Industrial Oil and Fat Products, pp. 209, 237-238.)
On the other hand, on August 24, 1961, respondent filed a motion to dismiss this appeal on the ground that the decision from which petitioner has appealed to this Court as contained in an indorsement sent by respondent to the Auditor of the Central Bank is not really a decision in the legal sense but merely an opinion which respondent has rendered on the question whether the use of hydrogenated cottonseed oil in the manufacture of lard may be considered as stabilizer within the meaning of the law. It is not a decision or order on any money claim which petitioner had filed with the Central Bank concerning the refund of the particular duty or exchange tax, which was adverse to petitioner. The nature of this appeal, it is claimed, is merely in the form of a declaratory judgment which cannot be the subject of an appeal of this nature. To this motion petitioner filed an opposition, and this Court deferred action thereon until the case is decided on the merits.
We find this motion meritorious, for really the alleged decision appealed from is merely an opinion rendered by respondent on the matter under consideration for guidance of the Foreign Department of the Central Bank. It was not rendered in connection with a specific claim for refund by petitioner or any other company for that matter, and so is not appealable under Section 1, Rule 44, of our Rules of Court.
Considering that the views expressed by the authors mentioned in the new evidence submitted by petitioner do not appear controverted, clarified, nor commented in any manner by respondent, and the issue herein involved is important and far-reaching, the Court is of the opinion that this is not the appropriate occasion to pass upon it but when the same is raised in an appropriate case if and when the amount of exchange tax which the Central Bank seeks to collect from petitioner is actually pressed in court, when an opportunity for examination of the evidence may be given to both parties. Meanwhile, this appeal should be dismissed, as prayed for by respondent, there being no final order or decision that may be the subject of appeal under Section 1, Rule 44, of our Rules of Court.
WHEREFORE, the decision rendered by this Court on December 29, 1962 is hereby set aside. The Court orders the dismissals of this appeal, without costs.
Padilla, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon and Makalintal, JJ., concur.
Bengzon, C.J., took no part.
Regala, J., did not take part.
On February 12, 1963, respondent was required to comment on the motion for reconsideration. Respondent submitted his comment on February 28, 1963 and therein he prayed that the motion be denied for lack of merit. He reiterated the arguments already advanced in his original brief.
In the meantime, petitioner prayed that Annexes A, A-1 to A-3, which are photostatic copies of pertinent pages of Alton E. Bailey’s book "Industrial Oil and Fat Products" be submitted as parts of his motion for reconsideration and, in its reply to respondent’s comment, it also attached certain annexes representing photostatic copies of pertinent pages of books and journals of some authorities to bolster up the arguments advanced therein in refutation of respondent’s comment.
During the oral argument held on April 24, 1963 on the motion for reconsideration, petitioner again asked for leave to submit certain documents which counsel marked as Exhibits AA, BB, X and Y, which petition was granted, and because said documents partake of the nature of new evidence which was submitted in the absence of respondent, the Court in its resolution of May 30, 1963 resolved to remand the case to respondent to give him an opportunity to examine and cross-examine the persons or officials who appear to be the authors or writers thereof and to take whatever action he may deem proper in the premises.
On December 13, 1963, respondent filed his compliance with this Court’s resolution and therein he quoted a memorandum submitted by Deputy Commissioner Flaviano M. Yenko of the National Institute of Science and Technology, which was concurred in by the Chairman of the National Science Development Board, wherein said official made a categorical statement that the views expressed by him as contained in the letter sent to petitioner’s counsel dated January 30, 1963 did not constitute a reversal of the previous opinion rendered by him on the matter under consideration.
The contents of said memorandum read as follows:jgc:chanrobles.com.ph
"We have your memorandum dated September 23, 1963 regarding a query from the Auditor General on the use of hydrogenated cottonseed oil.
"In this connection, please be informed that the views expressed by Mr. Charles Schuh and the undersigned which were endorsed by the Chairman in his letter to Atty. Dinglasan, dated January 30 do not constitute a reversal of the previous technical opinion rendered by this office that in the manufacture of vegetable lard, hydrogenated cottonseed oil serves as a component and not as a stabilizer.
"In the manufacture of vegetable lard, stearine (hydrogenated cottonseed oil) is added to the already stable liquid coconut oil in order to form plastic mixture and afterwards air is incorporated into this stearine-coconut oil mixture to improve its blending properties. From this point of view, stearine cannot be considered a stabilizer.
"While it is true that stearine forms with coconut oil a plastic mass that can keep the entrapped air, the stearine primarily serves to solidify or plasticize this liquid coconut oil, thereby forming a component part of the coconut-stearine plastic mixture.
"The stearine (hydrogenated cottonseed oil) therefore when used in the manufacture of shortening is to be considered as component and not a stabilizer."cralaw virtua1aw library
It should be noted that in said memorandum Commissioner Yenko merely states that the views expressed by him and Mr. Charles Schuh do not constitute a reversal of the previous opinion rendered by him that in the manufacture of vegetable lard hydrogenated cottonseed oil serves as a component and not as stabilizer, but does not refute nor comment on the views expressed by the authors mentioned in the new evidence submitted by petitioner. Some of those views follow:jgc:chanrobles.com.ph
"If an all-vegetable shortening is to be made with a minimum amount of hardened oil, the latter is usually hydrogenated to an iodine value of 15% or less. In the case of a shortening which is to be made entirely of cottonseed oil, about 10% to 15% of hardened oil or vegetable stearine is required in the mixture, the exact amount depending upon the iodine value and titer of the stearine.
"Coconut oil, as stated previously yields a shortening of rather poor plastic range. If coconut oil is to be used in a shortening in large proportions, the product is best made by blending unhydrogenated coconut oil with about 8% to 12% of vegetable stearine and as much cottonseed oil or rather liquid oil as may be permissible to use. Completely hydrogenated coconut oil has a melting point of but 110�F., hence vegetable stearine cannot be made from this oil." (Industrial Oil and Fat Products by Alton E. Bailey, pp. 237-238, Annex "A-3", Petition).
"Stabilizers. In general, any substance which makes a solution, mixture, suspension, or state, etc. more stable. Specifically, there are stabilizers which may retard a reaction rate or preserve a chemical equilibrium, act as anti-oxidants, keep pigments and other components in emulsion form in an emulsion paint, or prevent the particles in a colloidal suspension from precipitating." (Exh. X)
"Coconut oil consists of a complex mixture of the glyceride esters of fatty acids. Analysis show that the amount of unsaturation is low. This may be interpreted as giving the oil a high degree of resistance to the development of oxidative reacidity. This has been verified experimentally by Rodata and Dyogi (2) who found coconut oil 2531 days old to give a negative Kreis test." (Exh. Y)
2.0% hydrogenated cottonseed oil to be used as a stabilizer is not enough to plasticize liquid coconut oil. The general limits for the solid particles shall generally be within the range of 5.0% to 25.0%. In the case of shortening produced in the United States which is to be made entirely of cottonseed oil about 10.0% to 15% of hard oil or vegetable stearine is required in the mixture. In the United States the most commonly used oil for cooking is cottonseed oil in place of coconut oil in the Philippines. If coconut oil is to be used in shortening in large proportion, the product is best made by blending unhydrogenated coconut oil with 8.0% to 12.5% vegetable stearine." (As explained by Alton E. Bailey in his book, Industrial Oil and Fat Products, pp. 209, 237-238.)
On the other hand, on August 24, 1961, respondent filed a motion to dismiss this appeal on the ground that the decision from which petitioner has appealed to this Court as contained in an indorsement sent by respondent to the Auditor of the Central Bank is not really a decision in the legal sense but merely an opinion which respondent has rendered on the question whether the use of hydrogenated cottonseed oil in the manufacture of lard may be considered as stabilizer within the meaning of the law. It is not a decision or order on any money claim which petitioner had filed with the Central Bank concerning the refund of the particular duty or exchange tax, which was adverse to petitioner. The nature of this appeal, it is claimed, is merely in the form of a declaratory judgment which cannot be the subject of an appeal of this nature. To this motion petitioner filed an opposition, and this Court deferred action thereon until the case is decided on the merits.
We find this motion meritorious, for really the alleged decision appealed from is merely an opinion rendered by respondent on the matter under consideration for guidance of the Foreign Department of the Central Bank. It was not rendered in connection with a specific claim for refund by petitioner or any other company for that matter, and so is not appealable under Section 1, Rule 44, of our Rules of Court.
Considering that the views expressed by the authors mentioned in the new evidence submitted by petitioner do not appear controverted, clarified, nor commented in any manner by respondent, and the issue herein involved is important and far-reaching, the Court is of the opinion that this is not the appropriate occasion to pass upon it but when the same is raised in an appropriate case if and when the amount of exchange tax which the Central Bank seeks to collect from petitioner is actually pressed in court, when an opportunity for examination of the evidence may be given to both parties. Meanwhile, this appeal should be dismissed, as prayed for by respondent, there being no final order or decision that may be the subject of appeal under Section 1, Rule 44, of our Rules of Court.
WHEREFORE, the decision rendered by this Court on December 29, 1962 is hereby set aside. The Court orders the dismissals of this appeal, without costs.
Padilla, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon and Makalintal, JJ., concur.
Bengzon, C.J., took no part.
Regala, J., did not take part.
Endnotes:
* Editor’s Note: See decision on 6 SCRA 1002.
