Casco v Gimenez

28 February 1963
7 SCRA 347; G.R. No. L-17931

Ponente : Concepcion, J.
Deciding Court : En Banc

Relief :
A petition for review of a decision of the Auditor General denying a claim for refund of petitioner Casco
Philippine Chemical Co., Inc.

Doctrine / Pertinent Law : Enrolled Bill - If there has been any mistake in the printing of the bill before it was
certified by the officers of Congress and approved by the Executive on which we cannot speculate, without
jeopardizing the principle of separation of powers and undermining one of the cornerstones of our democratic
system the remedy is by amendment or curative legislation, not by judicial decree.

Fast facts :

Casco Philippine Chemical Co., Inc. (Casco) was engaged in the production of synthetic resin glues, used
primarily in the production of plywood, using the main components urea and formaldehyde, both of which are
being imported abroad.

Casco paid the required margin fee for its imported urea and formaldehyde pursuant to a Central Bank
circular, However, it later petitioned that urea and formaldehyde are tax exempt transactions citing Sec. 2, par
18 of Republic Act No. 2609 which provides which exempts urea formaldehyde for the manufacture of
plywood and hardboard.

Detailed facts:

Casco Philippine Chemical Co., Inc. (Casco) was engaged in the production of synthetic resin glues used
primarily in the production of plywood. The main components of the said glue are urea and formaldehyde
which are both being imported abroad.

Pursuant to a Central Bank circular, Casco paid the required margin fee for its imported urea and
formaldehyde. Casco however paid in protest as it maintained that urea and formaldehyde are tax exempt
transactions. The Central Bank agreed and it issued vouchers for refund. The said vouchers were submitted to
Pedro Gimenez, the then Auditor General, who denied the tax refund. Gimenez maintained that urea and
formaldehyde, as two separate and distinct components are not tax exempt; that what is tax exempt is urea
formaldehyde, which is the the synthetic resin formed by combining urea and formaldehyde. Gimenez cited
the provision of Sec. 2, par 18 of Republic Act No. 2609 which provides:

The margin established by the Monetary Board pursuant to the provision of section one hereof shall
not be imposed upon the sale of foreign exchange for the importation of the following:

XVIII. Urea formaldehyde for the manufacture of plywood and hardboard when imported by and for
the exclusive use of end-users.

Casco however averred that the term urea formaldehyde appearing in this provision should be construed as
urea and formaldehyde. It further contends that the bill approved in Congress contained the copulative
conjunction and between the terms urea and, formaldehyde, and that the members of Congress
intended to exempt urea and formaldehyde separately as essential elements in the manufacture of the
synthetic resin glue called urea formaldehyde, not the latter a finished product, citing in support of this view
the statements made on the floor of the Senate, during the consideration of the bill before said House, by
members thereof.

The enrolled bill however used the term urea formaldehyde

Issue: Whether or not the term urea formaldehyde should be construed as urea and formaldehyde.

Held or Ratio :

No. The National Institute of Science and Technology has expressed through its Commissioner that "urea
formaldehyde is not a chemical solution. It is the synthetic resin formed as a condensation product from
definite proportions of urea and formaldehyde under certain conditions relating to temperature, acidity, and
time of reaction. This makes "urea formaldehyde" clearly a finished product, which is patently distinct and
different from "urea" and "formaldehyde", as separate articles used in the manufacture of the synthetic resin
known as urea formaldehyde.

The opinions or statements of any member of Congress during the deliberation of the said law/bill do not
represent the entirety of the Congress itself. What is printed in the enrolled bill would be conclusive upon the
courts. The enrolled bill which uses the term urea formaldehyde instead of urea and formaldehyde is
conclusive upon the courts as regards the tenor of the measure passed by Congress and approved by the
President. If there has been any mistake in the printing of the bill before it was certified by the officers of
Congress and approved by the Executive on which the SC cannot speculate, without jeopardizing the
principle of separation of powers and undermining one of the cornerstones of our democratic system the
remedy is by amendment or curative legislation, not by judicial decree.

Court Decision : Decision appealed from is hereby affirmed, with costs against the petitioner.