Hijo Plantation, Inc. v. Central Bank of the Philippines
REITERATIONFacts
The Antecedents: Petitioners, domestic corporations engaged in banana production and exportation, sought to declare Monetary Board Resolution No. 1995, series of 1971, null and void. They also sought to prohibit the Central Bank from collecting stabilization tax on banana exports shipped between January 1, 1972, and June 30, 1982, and to secure a refund of taxes collected. Republic Act No. 6125 imposed a stabilization tax on certain export products, including bananas, to accelerate economic development and stabilize the peso. The law stipulated varying tax rates based on fiscal years and provided that any export product whose aggregate annual F.O.B. value exceeded five million United States dollars in any calendar year would be subject to the rates in force during the fiscal year following its reaching the said aggregate value. Procedural History: Petitioners, through counsel, sought clarification from the Central Bank regarding the collection of the stabilization tax. They opined that the tax should not be due until July 1, 1972, at a 4% rate. The Central Bank, through Monetary Board Resolution No. 1995, clarified that the tax for exports from January 1, 1972, to June 30, 1972, would be at 6%, and for July 1, 1972, to June 30, 1973, at 4%. Petitioners' request for reconsideration was denied, and they were compelled to pay the tax under protest. The Petition: Petitioners filed a petition for certiorari and prohibition, arguing that Monetary Board Resolution No. 1995 violated Republic Act No. 6125 and that the Central Bank acted in excess of its jurisdiction. The sole issue was whether the Monetary Board acted with grave abuse of discretion amounting to lack of jurisdiction.
Issue(s)
Whether Monetary Board Resolution No. 1995, series of 1971, was issued with grave abuse of discretion amounting to lack of jurisdiction, considering the prospective application of tax rates under Republic Act No. 6125. Whether the Central Bank exceeded its authority in implementing Republic Act No. 6125 by retroactively applying a 6% tax for the period January 1, 1972, to June 30, 1972, thereby contravening the legislative intent and the provisions of Section 1 of the Act.
Ruling
The petition is GRANTED. Monetary Board Resolution No. 1995, series of 1971, is declared null and void for having been issued in excess of jurisdiction.
Ratio Decidendi
On the issue of grave abuse of discretion and excess of jurisdiction regarding the prospective application of tax rates: The Court found merit in the petition. While the Central Bank is authorized to promulgate rules and regulations to carry out the provisions of Republic Act No. 6125, these regulations must be in consonance and harmony with the general purposes and objects of the law. The Court reiterated the principle that where there is a discrepancy between the basic law and a rule or regulation issued to implement it, the basic law prevails because the rule or regulation cannot go beyond the terms and provisions of the basic law. The Court cited People vs. Lim (108 Phil. 1091) and University of Sto. Tomas v. Board of Tax Appeals (93 Phil. 376) for the proposition that rules subverting the statute cannot be sanctioned. Furthermore, the Court emphasized that a public official must locate a grant of power in the statute relied upon before exercising it, and departmental zeal may not be permitted to outrun the authority conferred by statute, citing Radio Communications of the Philippines, Inc. v. Santiago (58 SCRA 493). On the issue of the Central Bank exceeding its authority by retroactively applying the tax: In this case, Section 1 of Republic Act No. 6125 clearly provided that an export product exceeding the aggregate annual F.O.B. value of five million US dollars would be subject to the rates of tax in force during the fiscal year following its reaching the said aggregate value. The petitioners' interpretation, supported by the congressional record, was that the tax should be prospective and apply only in the fiscal year following the calendar year during which the $5 million mark was reached. The Central Bank's Resolution No. 1995, by imposing a 6% tax for the period January 1, 1972, to June 30, 1972, effectively gave retroactive application to the tax and imposed a rate not applicable to that period according to the petitioners' interpretation of the law and the legislative intent. The Court concluded that the Monetary Board acted beyond its authority under the law and the Constitution, making the petition for certiorari and prohibition proper.
Main Doctrine
A rule or regulation issued to implement a basic law cannot go beyond the terms and provisions of the basic law; if it conflicts, the basic law prevails. Departmental zeal cannot outrun statutory authority.