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ACTING COMMISSIONER OF CUSTOMS V MANILA ELECTRIC COMPANY AND CTA

(1977, Fernando)
FACTS:
Meralco imported insulating oil for use in its plant operations.
Acting Commissioner of Customs Norberto Romualde !eld t!at t!ese insulating
oils are sub"ect to a special import ta#, in $!ic! Meralco !ad to pa% &99', under
protest.
Meralco claims t!at t!e insulating oils are e#empt b% (irtue of)
o *+ of RA No. 1,9- . e#empts e/uipment and spare parts for use in
industries from t!e special import ta#
o 09, &art 1$o of Meralco2s franc!ise . e#pressl% e#empts insulators
from ta#es of $!ate(er 3ind and nature in consideration for t!e
pa%ment of t!e percentage ta# on its gross earnings
1!e Court of 1a# Appeals (C1A) re(ersed t!e !olding of t!e Commissioner of
Customs
o Citing 4regor% 5. 6rad%2s Materials 7andboo3, it considered insulating
oils as insulator because insulating oils are used for cooling as $ell as
for insulating.
o 8t also cited t!e use of Meralco for said oils, in oil circuit brea3ers
$!ere t!e% are re/uired to maintain insulation bet$een t!e contacts
inside t!e tan3 and t!e tan3 itself.
ISSUE/s:
1. Can insulating oils be construed as insulators exempt under the special import
tax?
9. Can the CTA be overturned in this case?
HELD/RATIO:
! :es. Regarding t!e construction of ta# statutes and citing 56; Re%es in Republic
Flour Mills v CIR, <=8t is true t!at in t!e construction of ta# statutes ta#
e#emptions are not fa(ored in t!e la$, and are construed strictissimi juris
against t!e ta#pa%er. 7o$e(er, it is e/uall% a recognied principle t!at $!ere t!e
pro(ision of t!e la$ is clear and unambiguous, so t!at t!ere is no occasion for
t!e court>s see3ing t!e legislati(e intent, t!e la$ must be ta3en as it is, de(oid of
"udicial addition or subtraction.?
"! No. 1!is time citing Balbas v Domingo, <No ot!er conclusion is possible in (ie$
of t!e $ell@settled principle t!at t!is Court is bound b% t!e Anding of facts of t!e
Court of 1a# Appeals, onl% /uestions of la$ being open to it for determination.?
#$%&% t$% 'u%stion is on% o( (a)t* it is no long%& &%+i%,a-l%!
1!is is in line $it! t!e recognition t!at t!e C1A en"o%s a $ide discretion in
construing ta# statutes.
6% t!e (er% nature of its function, dedicates e#clusi(el% to t!e stud% and
consideration of ta# problems, it !as de(eloped an e#pertise on t!e sub"ect. 1!e
onl% e#ception to o(erruling t!e C1A is if t!ere !as been an abuse or impro(ident
e#ercise of its aut!orit% ($!ic! is not t!e case !ere).
It ,oul. -% an a/&ont to t$% s%ns% o( (ai&n%ss an. o( 0usti)% i( in t$%
%1%&)is% o( its .is)&%tiona&2 aut$o&it2* a(t%& .%t%&3ining t$at insulating
oil )o3%s ,it$in t$% t%&3 insulato&* is not -% u4$%l.!

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