Case Digest: Colgate-Palmolive Philippines vs Hon. Gimenez, G.R. No. L-14787

Colgate-Palmolive Philippines vs Hon. Gimenez, G.R. No. L-14787, January 28, 1961

Subject: Statutory Construction

FACTS

The petitioner Colgate-Palmolive Philippines, Inc. is a corporation duly organized and existing under Philippine laws engaged in the manufacture of toilet preparations and household remedies. On several occasions, it imported from abroad various materials such as irish moss extract, sodium benzoate, sodium saccharinate precipitated calcium carbonate and dicalcium phosphate, for use as stabilizers and flavoring of the dental cream it manufactures. For every importation made of these materials, the petitioner paid to the Central Bank of the Philippines the 17% special excise tax on the foreign exchange used for the payment of the cost, transportation and other charges incident thereto, pursuant to Republic Act No. 601, as amended, commonly known as the Exchange Tax Law.

On March 14, 1956, the petitioner filed with the Central Bank three applications for refund of the 17% special excise tax it had paid in the aggregate sum of P113,343.99. The claim for refund was based on section 2 of Republic Act 601. After the applications were processed by the officer-in-charge of the Exchange Tax Administration of the Central Bank, that official advised, the petitioner that of the total sum of P113,343.99 claimed by it for refund, the amount of P23,958.13 representing the 17% special excise tax on the foreign exchange used to import irish moss extract, sodium benzoate and precipitated calcium carbonate had been approved. The auditor of the Central Bank, however, refused to pass in audit its claims for refund even for the reduced amount fixed by the Officer-in-Charge of the Exchange Tax Administration, on the theory that toothpaste stabilizers and flavors are not exempt under section 2 of the Exchange Tax Law.

Petitioner appealed to the Auditor General, but the latter or, December 4, 1958 affirmed the ruling of the auditor of the Central Bank, maintaining that the term "stabilizer and flavors" mentioned in section 2 of the Exchange Tax Law refers only to those used in the preparation or manufacture of food or food products. Not satisfied, the petitioner brought the case to this Court thru the present petition for review.

ISSUE

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

No, it is inclusive.

The ruling of the Auditor General that the term "stabilizer and flavors" as used in the law refers only to those materials actually used in the preparation or manufacture of food and food products is based, apparently, on the principle of statutory construction that "general terms may be restricted by specific words, with the result that the general language will be limited by the specific language which indicates the statute's object and purpose." The rule, however, is, applicable only to cases where, except for one general term, all the items in an enumeration belong to or fall under one specific class.

In this case, on the basis of the grouping of the articles alone, it cannot validly be maintained that the term "stabilizer and flavors" as used in the above-quoted provision of the Exchange Tax Law refers only to those used in the manufacture of food and food products. This view is supported by the principle "Ubi lex non distinguish nec nos distinguire debemos", or "where the law does not distinguish, neither do we distinguish". Since the law does not distinguish between "stabilizer and flavors" used in the preparation of food and those used in the manufacture of toothpaste or dental cream, we are not authorized to make any distinction and must construe the words in their general sense. The rule of construction that general and unlimited terms are restrained and limited by particular recitals when used in connection with them, does not require the rejection of general terms entirely. It is intended merely as an aid in ascertaining the intention of the legislature and is to be taken in connection with other rules of construction.