Colgate-Palmolive Philippine v. Gimenez
REITERATIONFacts
The Antecedents: Petitioner Colgate-Palmolive Philippines, Inc. imported materials such as irish moss extract, sodium benzoate, sodium saccharinate, precipitated calcium carbonate, and dicalcium phosphate for use as stabilizers and flavoring in the dental cream it manufactures. Petitioner paid the 17% special excise tax on the foreign exchange used for these importations pursuant to Republic Act No. 601, as amended. Procedural History: Petitioner filed applications for refund of the 17% special excise tax paid. The Central Bank's officer-in-charge approved a partial refund of P23,958.13, representing the tax on irish moss extract, sodium benzoate, and precipitated calcium carbonate. However, the auditor of the Central Bank refused to audit the claims, even for the reduced amount, on the theory that toothpaste stabilizers and flavors are not exempt under Section 2 of the Exchange Tax Law. The Auditor General affirmed this ruling, stating that "stabilizer and flavors" in the law refers only to those used in food or food products. The Petition: Petitioner brought the case to the Supreme Court for review, seeking to have the foreign exchange used for importing dental cream stabilizers and flavors declared exempt from the 17% special excise tax, thereby entitling them to a refund.
Issue(s)
Whether or not the foreign exchange used by petitioner for the importation of dental cream stabilizers and flavors is exempt from the 17% special excise tax imposed by the Exchange Tax Law (Republic Act No. 601) so as to entitle it to refund under Section 2 thereof.
Ruling
The decision under review is reversed, and the respondents are ordered to audit petitioner's applications for refund which were approved by the Officer-in-Charge of the Exchange Tax Administration in the total amount of P23,958.13.
Ratio Decidendi
On the issue of exemption for dental cream stabilizers and flavors: The Court held that the foreign exchange used for the importation of dental cream stabilizers and flavors is exempt from the 17% special excise tax under Section 2 of Republic Act No. 601. The Auditor General's ruling that "stabilizer and flavors" in the law refers only to those used in food or food products was rejected. The Court applied the principle of statutory construction that "general terms may be restricted by specific words" but found this rule inapplicable here because the enumeration in Section 2 contains items that do not fall under the specific class of food or food products. For instance, "fertilizer" and "poultry feed" are used in farming and poultry industries, and "vitamin concentrate" is more akin to medicine. The Court also invoked the principle "Ubi lex non distinguish nec nos distinguire debemos" (where the law does not distinguish, neither do we distinguish). Since the law does not distinguish between stabilizers and flavors used in food and those used in toothpaste, the Court construed the words in their general sense. The rule of construction that general terms are restrained by particular recitals is an aid to ascertain legislative intent and must be taken with other rules, not to reject general terms entirely. Therefore, the term "stabilizer and flavors" should be understood in its broad meaning, encompassing those used in dental cream.
Main Doctrine
The term "stabilizer and flavors" in Section 2 of Republic Act No. 601 (Exchange Tax Law) is to be construed in its general sense and is not limited to those used in food or food products, thus entitling importers of dental cream stabilizers and flavors to a refund of the 17% special excise tax paid on foreign exchange used for their importation.