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Prof. Joselito Guianan Chan's The Labor Code of the Philippines, Annotated Labor Standards & Social Legislation Volume I of a 3-Volume Series 2019 Edition (3rd Revised Edition)
 

 
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UNITED STATES SUPREME COURT JURISPRUDENCE
 

 
PHILIPPINE SUPREME COURT JURISPRUDENCE
 

   
November-2001 Jurisprudence                 

  • G.R. No. 137968 November 6, 2001 - PEOPLE OF THE PHIL. v. ALEJANDRE DELOS SANTOS

  • G.R. Nos. 123138-39 November 8, 2001 - PEOPLE OF THE PHILS. v. HONESTO LLANDELAR

  • A.M. MTJ-01-1375 November 13, 2001 - REPORT ON THE JUDICIAL AUDIT IN THE MTCs of CALASIAO. BINMALEY

  • A.M. No. RTJ-00-1601 November 13, 2001 - ELIEZER A. SIBAYAN-JOAQUIN v. ROBERTO S. JAVELLANA

  • G.R. No. 104629 November 13, 2001 - PEOPLE OF THE PHIL. v. JULIUS KINOK

  • G.R. No. 134498 November 13, 2001 - CELIA M. MERIZ v. PEOPLE OF THE PHIL

  • G.R. Nos. 135454-56 November 13, 2001 - PEOPLE OF THE PHIL v. RODERICK SANTOS

  • A.M. No. CA-01-10-P November 14, 2001 - ALDA C. FLORIA v. CURIE F. SUNGA, ET AL.

  • A.M. No. P-01-1518 November 14, 2001 - ANTONIO A. ARROYO v. SANCHO L. ALCANTARA

  • G.R. No. 122736 November 14, 2001 - PEOPLE OF THE PHIL. v. FROILAN PADILLA

  • G.R. No. 123819 November 14, 2001 - PEOPLE OF THE PHIL. v. STEPHEN MARK WHISENHUNT

  • G.R. No. 133877 November 14, 2001 - RIZAL COMMERCIAL BANKING CORPORATION v. ALFA RTW MANUFACTURING CORPORATION

  • G.R. No. 133910 November 14, 2001 - PEOPLE OF THE PHILIPPINES v. JOSE VIRREY y DEHITO

  • G.R. No. 135511-13 November 14, 2001 - THE PEOPLE OF THE PHILIPPINES v. ENTICO MARIANO y EXCONDE

  • G.R. No. 137613 November 14, 2001 - PEOPLE OF THE PHIL. v. ROSALITO CABOQUIN

  • G.R. No. 138914 November 14, 2001 - PEOPLE OF THE PHIL. v. EFREN MANTES, ET AL.

  • G.R. No. 142870 November 14, 2001 - PEOPLE OF THE PHIL. v. DINDO F. PAJOTAL, ET AL.

  • G.R. Nos. 143513 & 143590 November 14, 2001 - POLYTECHNIC UNIVERSITY OF THE PHILIPPINES v. COURT OF APPEALS and FIRESTONE CERAMICS

  • A.M. No. RTJ-00-1599 November 15, 2001 - TRANQUILINO F. MERIS v. JUDGE FLORENTINO M. ALUMBRES

  • G.R. No. 123213 November 15, 2001 - NEPOMUCENA BRUTAS v. COURT OF APPEALS, ET AL.

  • G.R. No. 126584 November 15, 2001 - VALLEY LAND RESOURCES, INC., ET AL. v. VALLEY GOLF CLUB INC.

  • G.R. No. 127897 November 15, 2001 - DELSAN TRANSPORT LINES v. COURT OF APPEALS, ET AL.

  • G.R. No. 129018 November 15, 2001 - CARMELITA LEAÑO v. COURT OF APPEALS, ET AL.

  • G.R. No. 136017 November 15, 2001 - PEOPLE OF THE PHIL. v. JERRY BANTILING

  • G.R. No. 136143 November 15, 2001 - PEOPLE OF THE PHILIPPINES v. AGAPITO CABOTE a.k.a. "PITO"

  • G.R. No. 137255 November 15, 2001 - PEOPLE OF THE PHIL. v. NOEL MAMALAYAN, ET AL.

  • G.R. No. 137369 November 15, 2001 - PEOPLE OF THE PHILIPPINES v. ALIAS KOBEN VISTA

  • G.R. No. 141811 November 15, 2001 - FIRST METRO INVESTMENT CORPORATION v. ESTE DEL SOL MOUNTAIN RESERVE

  • G.R. No. 145275 November 15, 2001 - COMMISSIONER OF INTERNAL REVENUE v. LA CAMPANA FABRICA DE TABACOS

  • G.R. No. 148326 November 15, 2001 - PABLO C. VILLABER Petitioner v. COMMISSION ON ELECTIONS and REP. DOUGLAS R. CAGAS

  • A.M. No. MTJ-01-1382 November 16, 2001 - MARIO W. CHILAGAN v. EMELINA L. CATTILING

  • A.M. No. P-00-1411 November 16, 2001 - FELICIDAD JACOB v. JUDITH T. TAMBO

  • G.R. No. 120274 November 16, 2001 - SPOUSES FRANCISCO A. PADILLA and GERALDINE S. PADILLA v. COURT OF APPEALS and SPOUSES CLAUDIO AÑONUEVO and CARMELITA AÑONUEVO

  • G.R. No. 127003 November 16, 2001 - THE PEOPLE OF THE PHIL v. FAUSTINO GABON

  • G.R. Nos. 132875-76 November 16, 2001 - PEOPLE OF THE PHIL. v. ROMEO G. JALOSJOS

  • G.R. No. 132916 November 16, 2001 - RUFINA TANCINCO v. GSIS, ET AL.

  • G.R. No. 133437 November 16, 2001 - PEOPLE OF THE PHILIPPINES v. RONALD SAMSON

  • G.R. No. 134486 November 16, 2001 - PEOPLE OF THE PHIL. v. CLEMENTE DAYNA

  • G.R. No. 135038 November 16, 2001 - ROLANDO Y. TAN v. COURT OF APPEALS, ET AL.

  • G.R. No. 142654 November 16, 2001 - PEOPLE OF THE PHIL v. ROLANDO MENDOZA

  • G.R. No. 143802 November 16, 2001 - REYNOLAN T. SALES v. SANDIGANBAYAN, ET AL.

  • G.R. No. 129175 November 19, 2001 - RUBEN N. BARRAMEDA, ET AL. v. ROMEO ATIENZA, ET AL.

  • G.R. No. 130945 November 19, 2001 - PEOPLE OF THE PHIL. v. ALBERTO CONDINO

  • G.R. No. 132724 November 19, 2001 - PEOPLE OF THE PHILIPPINES v. RENIEL SANAHON

  • G.R. Nos. 138358-59 November 19, 2001 - PEOPLE OF THE PHIL. v. CLAUDIO B. DELA PEÑA

  • G.R. No. 138661 November 19, 2001 - PEOPLE OF THE PHIL. v. JERSON E. ACOJEDO

  • G.R. No. 140920 November 19, 2001 - JUAN LORENZO B. BORDALLO, ET AL. v. THE PROFESSIONAL REGULATIONS COMMISSION AND THE BOARD OF MARINE DECK OFFICERS

  • G.R. No. 148560 November 19, 2001 - JOSEPH EJERCITO ESTRADA v. SANDIGANBAYAN (Third Division) and PEOPLE OF THE PHILIPPINES

  • G.R. No. 91486 November 20, 2001 - ALBERTO G. PINLAC v. COURT OF APPEALS, ET AL.

  • G.R. No. 122276 November 20, 2001 - RODRIGO ALMUETE ET AL., v. MARCELO ANDRES, ET AL.

  • G.R. No. 126204 November 20, 2001 - NAPOCOR v. PHILIPP BROTHERS OCEANIC

  • G.R. Nos. 126538-39 November 20, 2001 - PEOPLE OF THE PHILIPPINES v. RODELIO MARCELO

  • G.R. No. 129234 November 20, 2001 - THERMPHIL v. COURT OF APPEALS ET AL.

  • G.R. No. 140032 November 20, 2001 - PEOPLE OF THE PHILIPPINES v. ANGEL C. BALDOZ and MARY GRACE NEBRE

  • G.R. No. 140692 November 20, 2001 - ROGELIO C. DAYAN v. BANK OF THE PHILIPPINE ISLANDS, ET AL.

  • G.R. No. 144401 November 20, 2001 - PEOPLE OF THE PHIL. v. JOEL GALISIM

  • A.M. No. MTJ-99-1207 November 21, 2001 - NBI v. FRANCISCO D. VILLANUEVA

  • A.M. No. P- 01-1520 November 21, 2001 - MARILOU A. CABANATAN v. CRISOSTOMO T. MOLINA

  • A.M. Nos. RTJ-00-1561 & RTJ-01-1659 November 21, 2001 - CARINA AGARAO v. Judge JOSE J. PARENTELA

  • G.R. No. 125356 November 21, 2001 - SUPREME TRANSLINER INC. v. HON. COURT OF APPEALS, ET AL.

  • G.R. No. 132839 November 21, 2001 - ERIC C. ONG v. HON. COURT OF APPEALS and THE PEOPLE OF THE PHILIPPINES

  • G.R. No. 133879 November 21, 2001 - EQUATORIAL REALTY DEVELOPMENT v. MAYFAIR THEATER

  • G.R. No. 136748 November 21, 2001 - PEOPLE OF THE PHIL. v. JUANITO ET AL.

  • G.R. No. 137457 November 21, 2001 - PEOPLE OF THE PHIL. v. ROSAURO SIA

  • G.R. No. 141881 November 21, 2001 - THE PEOPLE OF THE PHILIPPINES v. VIRGILIO BERNABE y RAFOL

  • A.M. No RTJ-01-1664 November 22, 2001 - ALFREDO CAÑADA v. VICTORINO MONTECILLO

  • G.R. No. 109648 November 22, 2001 - PH CREDIT CORPORATION v. COURT OF APPEALS and CARLOS M. FARRALES

  • G.R. Nos. 111502-04 November 22, 2001 - REYNALDO H. JAYLO, ET AL. v. SANDIGANBAYAN

  • G.R. No. 113218 November 22, 2001 - ALEJANDRO TECSON v. HON. COURT OF APPEALS ET AL.

  • G.R. No. 113541 November 22, 2001 - HONGKONG AND SHANGHAI BANKING CORP. EMPLOYEES UNION v. NLRC, ET AL.

  • G.R. No. 118462 November 22, 2001 - LEOPOLDO GARRIDO, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 123893 November 22, 2001 - LUISITO PADILLA , ET AL. v. THE HONORABLE COURT OF APPEALS, ET AL.

  • G.R. No. 129660 November 22, 2001 - BIENVENIDO P. JABAN and LYDIA B. JABAN v. HON. COURT OF APPEALS, ET AL.

  • G.R. No. 130628 November 22, 2001 - PEOPLE OF THE PHIL. v. PAULINO LEONAR

  • G.R. No. 132743 November 22, 2001 - PEOPLE OF THE PHIL. v. MARCIAL CAÑARES Y ORBES

  • G.R. No. 133861 November 22, 2001 - PEOPLE OF THE PHIL. v. ROBERTO SO

  • G.R. Nos. 135853-54 November 22, 2001 - PEOPLE OF THE PHIL. v. OPENIANO LACISTE

  • G.R. No. 135863 November 22, 2001 - PEOPLE OF THE PHIL. v. VlRGILIO LORICA

  • G.R. Nos. 136317-18 November 22, 2001 - PEOPLE OF THE PHIL. v. EDUARDO YAOTO

  • G.R. No. 136586 November 22, 2001 - JON AND MARISSA DE YSASI v. ARTURO AND ESTELA ARCEO

  • G.R. No. 139563 November 22, 2001 - THE PEOPLE OF THE PHIL.. v. AMADOR BISMONTE y BERINGUELA

  • G.R. Nos. 139959-60 November 22, 2001 - PEOPLE OF THE PHIL. v. DEOGRACIAS BURGOS

  • G.R. No. 141602 November 22, 2001 - PACSPORTS PHILS. v. NICCOLO SPORTS, INC.

  • G.R. No. 142316 November 22, 2001 - FRANCISCO A.G. DE LIANO, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 143939 November 22, 2001 - HEIRS OF ROSARIO POSADAS REALTY v. ROSENDO.BANTUG

  • G.R. No. 145475 November 22, 2001 - PEOPLE OF THE PHILIPPINES v. EUSEBIO PUNSALAN

  • G.R. No. 145851 November 22, 2001 - ABELARDO B. LICAROS v. THE SANDIGANBAYAN, ET AL.

  • G.R. No. 146683 November 22, 2001 - CIRILA ARCABA v. ERLINDA TABANCURA VDA. DE BATOCAEL, ET AL.

  • A.M. No. RTJ-00-1562 November 23, 2001 - CAVITE CRUSADE FOR GOOD GOVERNMENT v. JUDGE NOVATO CAJIGAL

  • G.R. No. 126334 November 23, 2001 - EMILIO EMNACE v. COURT OF APPEALS, ET AL.

  • G.R. No. 128886 November 23, 2001 - PEOPLE OF THE PHIL. v. JESUS JULIANDA, JR., ET AL.

  • G.R. No. 142044 November 23, 2001 - PEOPLE OF THE PHIL. v. TOBECHUKWU NICHOLAS

  • G.R. No. 144309 November 23, 2001 - SOLID TRIANGLE SALES CORPORATION and ROBERT SITCHON v. THE SHERIFF OF RTC QC, ET AL.

  • A.M. No. RTJ-01-1662 November 26, 2001 - VICTOR TUZON v. LORETO CLORIBEL-PURUGGANAN

  • G.R. No. 138303 November 26, 2001 - PEOPLE OF THE PHIL. v. ELROSWELL MANZANO

  • G.R. Nos. 100940-41 November 27, 2001 - PEOPLE OF THE PHILIPPINES v. AGUSTIN LADAO y LORETO, ET AL.

  • G.R. No. 128285 November 27, 2001 - PEOPLE OF THE PHILS. v. ANTONIO PLANA, ET AL.

  • G.R. Nos. 130409-10 November 27, 2001 - PEOPLE OF THE PHIL. v. JOSUE B. DUMLAO

  • G.R. No. 130907 November 27, 2001 - REPUBLIC OF THE PHIL. v. HON. CESAR A MANGROBANG, ET AL.

  • G.R. No. 130963 November 27, 2001 - PEOPLE OF THE PHIL. v. MARIANO PASCUA

  • G.R. No. 133381 November 27, 2001 - PEOPLE OF THE PHIL. v. ROMULO VILLAVER, ET. AL.

  • G.R. No. 140858 November 27, 2001 - SPOUSES PAPA and LOLITA MANALILI v. SPOUSES ARSENIO and GLICERIA DE LEON

  • G.R. No. 142523 November 27, 2001 - MARIANO L. GUMABON, ET AL. v. AQUILINO T. LARIN

  • G.R. No. 144464 November 27, 2001 - GILDA G. CRUZ and ZENAIDA C. PAITIM v. THE CIVIL SERVICE COMMISSION

  • A.M. No. 00-8-05-SC November 28, 2001 - RE: PROBLEM OF DELAYS IN CASES BEFORE THE SANDIGANBAYAN

  • G.R. No. 128516 November 28, 2001 - DULOS REALTY and DEVELOPMENT CORP. v. COURT OF APPEALS, ET. AL.

  • A.M. No. P-01-1485 November 29, 2001 - OFFICE OF THE COURT ADMINISTRATOR v. MARIE YVETTE GO, ET AL

  • A.M. No. P-01-1522 November 29, 2001 - JUDGE ANTONIO J. FINEZA v. ROMEO P. ARUELO

  • A.M. No. RTJ-01-1665 November 29, 2001 - ROSAURO M. MIRANDA v. JUDGE CESAR A MANGROBANG

  • G.R. No. 119707 November 29, 2001 - VERONICA PADILLO v. COURT OF APPEALS

  • G.R. No. 121703 November 29, 2001 - NATIVIDAD T. TANGALIN v. COURT OF APPEALS, ET AL.

  • G.R. No. 126524 November 29, 2001 - BPI INVESTMENT CORP. v. D.G. CARREON COMMERCIAL CORP., ET AL.

  • G.R. No. 129282 November 29, 2001 - DMPI EMPLOYEES CREDIT COOPERATIVE v. ALEJANDRO M. VELEZ, ET AL.

  • G.R. Nos. 129609 & 135537 November 29, 2001 - RODIL ENTERPRISES v. COURT OF APPEALS, ET AL.

  • G.R. Nos. 130326 & 137868 November 29, 2001 - COMPANIA GENERAL DE TABACOS DE FILIPINAS AND MANILA TOBACCO TRADING v. THE COURT OF APPEALS

  • G.R. Nos. 132066-67 November 29, 2001 - PEOPLE OF THE PHIL. v. BALAS MEDIOS

  • G.R. No. 132133 November 29, 2001 - PEOPLE OF THE PHILIPPINES v. WILLIAM ALPE y CUATRO

  • G.R. No. 136848 November 29, 2001 - PEOPLE OF THE PHIL. v. RENATO T. RAMIREZ

  • G.R. No. 137815 November 29, 2001 - JUANITA T. SERING v. COURT OF APPEALS, ET AL.

  • G.R. No. 138489 November 29, 2001 - ELEANOR DELA CRUZ, ET AL. v. COMMISSION ON AUDIT

  • G.R. No. 139470 November 29, 2001 - PEOPLE OF THE PHIL. v. SPO2 ANTONIO B. BENOZA

  • G.R. No. 140386 November 29, 2001 - PEOPLE OF THE PHIL. v. BENNY ACOSTA

  • G.R. No. 141386 November 29, 2001 - COMMISSION ON AUDIT OF THE PROVINCE OF CEBU v. PROVINCE OF CEBU

  • G.R. Nos. 141702-03 November 29, 2001 - CATHAY PACIFIC AIRWAYS v. NLRC and MARTHA Z. SINGSON

  • G.R. No. 142606 November 29, 2001 - PEOPLE OF THE PHILIPPINES v. NESTOR MUNTA

  • G.R. No. 143127 November 29, 2001 - PEOPLE OF THE PHIL. v. RAUL RUBARES Y CAROLINO

  • G.R. No. 143703 November 29, 2001 - PEOPLE OF THE PHIL v. JOSE V. MUSA

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    G.R. No. 145275   November 15, 2001 - COMMISSIONER OF INTERNAL REVENUE v. LA CAMPANA FABRICA DE TABACOS

     
    PHILIPPINE SUPREME COURT DECISIONS

    FIRST DIVISION

    [G.R. No. 145275. November 15, 2001.]

    COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. LA CAMPANA FABRICA DE TABACOS, INC., Respondent.

    D E C I S I O N


    PARDO, J.:


    The Case


    Appeal via certiorari from the decision of the Court of Appeals 1 affirming the decision of the Court of Tax Appeals canceling the assessment issued against respondent for deficiency specific tax on stemmed leaf tobacco in the amount of P2,785,338.75, covering the period from January 1, 1986 to June 30, 1989.chanrob1es virtua1 1aw 1ibrary

    The Facts


    The facts, as found by the Court of Appeals, are as follows:jgc:chanrobles.com.ph

    "Respondent is a domestic corporation engaged in, among others, the importation and local purchase of stemmed leaf tobacco which it uses as raw material in the production and manufacture of cigar and cigarettes.

    "On January 4, 1990, Respondent received from Petitioner a letter dated December 18, 1989, demanding payment of P2,785,338.75 representing deficiency excise tax, exclusive of surcharge and interest on Respondent’s purchases of stemmed leaf tobacco covering the period from January 1, 1986 to June 30, 1989. The demand letter was essentially based on Sec. 141(b) of the National Internal Revenue’s interpretation that:jgc:chanrobles.com.ph

    "SEC. 141 of the Code provides that there should be collected a tax of P0.75 on each kilogram of the following products of tobacco;

    "(b) tobacco prepared or partially prepared with or without the use of any machine or instrument or without being pressed or sweetened. Stemmed leaf tobacco is partially-prepared tobacco as provided under Section 1(L) of Revenue Regulations No. 17-67.

    "Further, under the penultimate paragraph of the same section, it provides that fine-cut shorts and refuse, scraps, clipping, stems and sweepings of tobacco resulting from handling and stripping of whole leaf tobacco may be transferred, disposed of or otherwise, sold, without the prepayment of the specific tax when the same are to be used in the manufacture of other tobacco products on which the excise tax will eventually be paid on the finished product. It will be noted from the above enumeration, however, that stemmed leaf tobacco is not among the products exempted from the payment of tax." (idem supra), (Emphasis supplied)

    "On January 12, 1990, Respondent wrote Petitioner a letter protesting the aforementioned deficiency assessment and requesting the reconsideration and withdrawal of said assessment. In the same letter, Respondent stressed that the BIR assessment was based solely on Section 141(b) of the NIRC without, however, applying Section 137 thereof, the more specific provision which expressly allows the sale of stemmed leaf tobacco as raw material by one manufacturer directly to another without payment of the (excise) tax considering that Respondent purchased stemmed leaf tobacco from manufacturers. Additionally, Respondent made reference to a BIR Ruling dated December 12, 1972, wherein the BIR expressly ruled that, under Section 137 of the NIRC, the sale of partially manufactured tobacco from a wholesale leaf tobacco dealer (L-3R) to a manufacturer of tobacco products (L-7) for use in the manufacture of cigar and cigarettes may also be allowed without prepayment of the tax.chanrob1es virtua1 1aw 1ibrary

    "On November 26, 1990, Respondent received a letter from Petitioner dated August 31, 1990 denying Respondent’s protest on the grounds, inter alia, that:jgc:chanrobles.com.ph

    "In Support of your contention you cited BIR Ruling dated 12 December 1972 wherein it was held that’ . . . the subsequent sale or transfer by the L-6/L-3R permittee of the redried or reprocessed product to another L-6 permittee for export or to an L-71/2 for use in the manufacture of cigars or cigarettes may also be allowed without the prepayment of specific tax.’

    "Clearly from the aforequoted ruling, the transfer or sale of partially manufactured tobacco, as a rule, is subject to specific tax unless there is an express grant of exemption from the payment of tax. The tax payers up to this point in time have not presented any authority issued by the BIR granting them exemption."cralaw virtua1aw library

    "On November 26, 1990, Respondent likewise received another letter from the Petitioner dated October 17, 1990 denying Respondent’s protest with finality and reiterating the demand to pay the amount of P2,785,338.75, representing deficiency specific tax, exclusive of increments, computed as follows, to wit:chanrob1es virtual 1aw library

    STEMMED LEAF TOBACCO RATE OF TAX SPECIFIC TAX

    Local 3,713.785 kls. 0.75 P2,785,338.75

    "On December 6, 1990, Respondent filed with the Court of Tax Appeals a "Petition for Review" seeking for the annulment of the deficiency assessment.

    "On August 31, 1995, the Tax Court a quo rendered its Decision, the decretal portion of which reads, to wit:jgc:chanrobles.com.ph

    "WHEREFORE, in all the foregoing, the assessment of alleged deficiency specific tax in the amount of P2,785,338.75 issued by the Respondent is hereby CANCELLED for lack of merit.

    "SO ORDERED." (at page 33, Rollo)

    "On September 22, 1995, Respondent filed a Motion for Reconsideration of the aforesaid decision, but the same was denied in a Resolution of the Tax Court a quo, dated May 7, 1996." 2

    On June 10, 1998, petitioner filed with the Court of Appeals a petition for review of the decision of the Court of Tax Appeals. 3

    On September 28, 2000, the Court of Appeals promulgated a decision denying the petition and affirming the decision of the Court of Tax Appeals. 4

    Hence, this appeal. 5

    The Issue


    The issue raised is whether respondent is liable for deficiency specific tax under Section 141(b) of the Tax Code in the amount of P2,785,338.75 on purchases of stemmed leaf tobacco for the period January 1, 1986 to June 30, 1989.chanrob1es virtua1 1aw 1ibrary

    The Court’s Ruling


    We reverse the decision of the Court of Appeals.

    Section 137 (now Sec. 140) 6 of the Tax Code reads in part:jgc:chanrobles.com.ph

    "SECTION 137. Removal Of Tobacco products without prepayment of tax. — Products of tobacco entirely unfit for chewing or smoking may be removed free of tax for agricultural or industrial use, under such conditions as may be prescribed in the regulations of the Department of Finance. Stemmed leaf tobacco, fine-cut shorts, the refuse of fine-cut chewing tobacco, scraps, cuttings, clippings, stems or midribs, and sweeping of tobacco may be sold in bulk as raw material by one manufacturer directly to another, without payment of the tax under such conditions as may be prescribed in the regulations of the Department of Finance.

    "Stemmed leaf tobacco," as herein used means leaf tobacco which has had the stem or midrib removed. The term does not include broken leaf tobacco."cralaw virtua1aw library

    Thus, the conditions under which stemmed leaf tobacco may be transferred from one factory to another without prepayment of specific tax are as follows:chanrob1es virtual 1aw library

    (a) The transfer shall be under an official L-7 invoice on which shall be entered the exact weight of the tobacco at the time of its removal.

    (b) Entry shall be made in the L-7 register in the place provided on the page removals.

    (c) Corresponding debit entry shall be made in the L-7 register book of the factory receiving the tobacco under the heading "Refuse, etc., received from the other factory," showing the date of receipt, assessment and invoice numbers, name and address of the consignor, form in which received, and the weight of the tobacco.chanrob1es virtua1 1aw 1ibrary

    Parenthetically, under Revenue Regulations No. 17-67, others-vise known as "Tobacco Regulations on Leaf, Scrap, Other Partially Manufactured Tobacco and Other Tobacco Products; Grading, Classification, Inspection, Shipments, Exportation, Importation and the Manufacture thereof under the provisions of Act No. 2613, as amended," leaf tobacco dealers and manufacturers of tobacco products are administratively designated as follows:jgc:chanrobles.com.ph

    "CHAPTER I

    ADMINISTRATIVE DESIGNATION, SCHEDULES,

    PARAGRAPH AND ASSESSMENT NUMBER

    x       x       x


    Section 3.

    (a) L-3 — Wholesale leaf tobacco dealer.

    (b) L-3F — Wholesale leaf tobacco dealer. Issued only in favor of Farmer’s Cooperative Marketing Association (FaCoMas) duly organized in accordance with law.

    x       x       x


    (c) L-3R — Wholesale leaf tobacco dealers. Issued only in favor of persons or entities having fully equipped Redrying Plants.

    (d) L-3 — Buyers for wholesale leaf of tobacco dealers.

    (e) L-4 — Wholesale leaf tobacco dealers. Issued only in favor of persons or entities having flue-curing barns, who may purchase or receive green Virginia Leaf Tobacco from bona fide tobacco planters only, or handle green leaf of their own production, which tobacco shall be sold or transferred only to holders of L-3 and L-3R permits after fluecuring the tobacco.

    (f) L-5 — Tobacco planters selling to consumers part or the whole of their tobacco productions.

    (g) L-6 — Wholesale leaf tobacco dealers who, exclusively for export, except as otherwise provided for in these regulations perform the following functions:chanrob1es virtual 1aw library

    (1) Handstripped and/or thresh whole leaf tobacco for themselves or for other L-6 or L-7 permittees;

    (2) Re-process partially manufactured tobacco for themselves, or for other L-6 or L-7 permittees;

    (3) Sell their partially manufactured tobacco to other L-6 permittees;

    (h) L-7 — Manufacturers of tobacco products. (L-7 designates all auxiliary registered book [bale books], for manufacturers of tobacco products)chanrob1es virtua1 1aw 1ibrary

    (i) B-14 — Wholesale leaf tobacco dealers (Privilege tax receipt).

    (j) B-14(a) — Retail leaf tobacco dealers (Privilege tax receipt). (Emphasis ours)

    Thus, under Sec. 3(h) of Revenue Regulations No. 17 67, L-7 refers to "Manufacturers of tobacco products." Hence, the transferor of the stemmed leaf tobacco must be an L-7 tobacco manufacturer. This is so because obviously only an L-7 tobacco manufacturer has an official L-7 invoice and an L-7 register and the transferee of the stemmed leaf tobacco must also be an L-7 tobacco manufacturer because, to repeat, only an L-7 tobacco manufacturer has an L-7 registry book.

    In the case at bar, the stemmed leaf tobacco purchased by respondent came from Tobacco Industries of the Philippines, NGC Trading and Philippine Tobacco Fluecuring Corporation, who are all L-6 permittees.

    Section 137 (now 140) of the Tax Code qualifies the term "manufacturer" by the phrase "under such conditions as may be prescribed in the regulations of the Department of Finance." Under such regulations the term "manufacturer" refers only to L-7.

    We agree with the petitioner that the exemption from specific tax of the sale of stemmed leaf tobacco as raw material by one L-7 directly to another L-7 is because such stemmed leaf tobacco has been subjected to specific tax when an L-7 manufacturer purchased the same from wholesale leaf tobacco dealers designated under Section 3, Chapter I, Revenue Regulations No. 17-67 (supra) as L-3, L-3F, L-3R, L-4, or L-6, the latter being also a stripper of leaf tobacco. These are the sources of stemmed leaf tobacco to be used as raw materials by an L-7 manufacturer which does not produce stemmed leaf tobacco. When an L-7 manufacturer sells the stemmed leaf tobacco purchased from the foregoing suppliers to another L-7 manufacturer as raw material, such sale is not subject to specific tax under Section 137 (now Section 140), as implemented by Section 20(a) of Revenue Regulations No. V 39.

    Consequently, respondent’s purchases of stemmed leaf tobacco were not exempt from specific tax.chanrob1es virtua1 1aw 1ibrary

    The Fallo

    WHEREFORE, the Court REVERSES the decision of the Court of Appeals and the Court of Tax Appeals. The Court orders respondent to pay the amount of P2,785,338.75, as deficiency specific tax on purchases of stemmed leaf tobacco for the period January 1, 1986 to June 30, 1989, plus penalties incident to delinquency pursuant to Sections 248 and 249 of the Tax Code.

    No costs.chanrob1es virtua1 law library

    SO ORDERED.

    Davide Jr., C.J., Puno, Kapunan, and Ynares-Santiago, JJ., concur.

    Endnotes:



    1. In CA-G.R. SP No. 40773, promulgated on September 28, 2000. Callejo, Sr., J., ponente, Reyes, and Villarama, Jr., JJ., concurring.

    2. Petition, Annex "A", Rollo, pp. 23-34, at pp. 23-25.

    3. Petition, CA Rollo, pp. 8-62.

    4. Petition, Annex "A", Rollo, pp. 23-34.

    5. Petition filed on November 20, 2000, Rollo, pp. 8-22.

    6. The National Internal Revenue Code of 1997.

    G.R. No. 145275   November 15, 2001 - COMMISSIONER OF INTERNAL REVENUE v. LA CAMPANA FABRICA DE TABACOS


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