La Suerte v CA

Facts:

Th i s c a s e i n vo l v e s t h e t a x a b i l i t y o f s t e m me d l e a f t o b a c c o i mp o r t e d a n d l o c a l l ypurchased by La
S u e r t e C i g a r & C i g a r e t t e F a c t o r y f o r u s e a s r a w m a t e r i a l i n t h e manufacture of their cigarettes. Stemmed
leaf tobacco, as herein used means leaftobacco which has had the stem or midrib removed.O n J a n u a r y 1 2 , 1 9 9 0 , L a
S u e r t e p r o t e s t e d t h e e x c i s e t a x d e f i c i e n c y a s s e s s m e n t stressing that the BIR assessment was based solely on Section
141(b) of the Tax Code,“ p a r t i a l l y p r e p a r e d o r m a n u f a c t u r e d t o b a c c o i s s u b j e c t t o s p e c i f i c t a x . ”
W i t h o u t , however, applying Section 137 thereof, the more specific provision, which expresslyallows the sale of
stemmed leaf tobacco as raw material by one manufacturer directly toanother without payment of the excise tax. However, in a
letter, dated August 31, 1990,Commissioner Jose U. Ong denied La Suerte’s protest, insisting that stemmed
leaftobacco is subject to excise tax "unless there is an express grant of exemption from thepayment of tax."