Beruflich Dokumente
Kultur Dokumente
SECRETARY MOCHAEL
DEFENSOR; GR. NO. 163980; AUGUST 3, 2006
FACTS: The instant petition for prohibition under Rule 65 of the
any other plain, speedy and adequate remedy in the ordinary course of law.
[20][21] Prohibition lies against judicial or ministerial functions, but not
against legislative or quasi-legislative functions.
Generally, the purpose of a writ of prohibition is to keep a lower court within
the limits of its jurisdiction in order to maintain the administration of justice
in orderly channels. Prohibition is the proper remedy to afford relief against
usurpation of jurisdiction or power by an inferior court, or when, in the
exercise of jurisdiction in handling matters clearly within its cognizance the
inferior court transgresses the bounds prescribed to it by the law, or where
there is no adequate remedy available in the ordinary course of law by which
such relief can be obtained. Where the principal relief sought is to invalidate
an IRR, petitioners remedy is an ordinary action for its nullification, an action
which properly falls under the jurisdiction of the Regional Trial Court.
In any case, petitioners allegation that respondents are performing or
threatening to perform functions without or in excess of their jurisdiction
may appropriately be enjoined by the trial court through a writ of injunction
or a temporary restraining order. WHEREFORE, the instant petition for
prohibition is DISMISSED.
LBP v CA
FACTS
Private respondents are landowners whose landholdings were acquired by the DAR and subjected to
transfer schemes to qualified beneficiaries under the Comprehensive Agrarian Reform Law. Aggrieved by
the alleged lapses of the DAR and the Landbank with respect to the valuation and payment of
compensation for their land pursuant to the provisions of RA 6657, private respondents filed with this
Court a Petition for Certiorari and Mandamus with prayer for preliminary mandatory injunction. Private
respondents questioned the validity of DAR Administrative Order No. 6, Series of 1992 6 and DAR
Administrative Order No. 9, Series of 1990, 7 and sought to compel the DAR to expedite the pending
summary administrative proceedings to finally determine the just compensation of their properties, and
the Landbank to deposit in cash and bonds the amounts respectively "earmarked", "reserved" and
"deposited in trust accounts" for private respondents, and to allow them to withdraw the same.
Petitioners maintain that the word "deposit" as used in Section 16(e) of RA 6657 referred merely to the act
of depositing and in no way excluded the opening of a trust account as a form of deposit. Thus, in opting
for the opening of a trust account as the acceptable form of deposit through Administrative Circular No. 9,
petitioner DAR did not commit any grave abuse of discretion since it merely exercised its power to
promulgate rules and regulations in implementing the declared policies of RA 6657.
ISSUE
WON the administrative issuances should be nulled.
HELD
Yes. It is very explicit therefrom that the deposit must be made only in "cash" or in "LBP bonds". Nowhere
does it appear nor can it be inferred that the deposit can be made in any other form. If it were the intention
to include a "trust account" among the valid modes of deposit, that should have been made express, or at
least, qualifying words ought to have appeared from which it can be fairly deduced that a "trust account"
is allowed. In sum, there is no ambiguity in Section 16(e) of RA 6657 to warrant an expanded construction
of the term "deposit".
The conclusive effect of administrative construction is not absolute. Action of an administrative agency
may be disturbed or set aside by the judicial department if there is an error of law, a grave abuse of power
or lack of jurisdiction or grave abuse of discretion clearly conflicting with either the letter or the spirit of a
legislative enactment. 18 In this regard, it must be stressed that the function of promulgating rules and
regulations may be legitimately exercised only for the purpose of carrying the provisions of the law into
effect. The power of administrative agencies is thus confined to implementing the law or putting it into
effect. Corollary to this is that administrative regulations cannot extend
the law and amend a legislative enactment, 19 for settled is the rule that administrative regulations must be
in harmony with the provisions of the law. And in case there is a discrepancy between the basic law and
an implementing rule or regulation, it is the former that prevails. 20
CIR v CA
FACTS
Executive Order No. 41 was promulgated declaring a one-time tax amnesty
on unpaid income taxes. Availing itself of the amnesty, respondent R.O.H.
Auto Products Philippines, Inc., its Tax Amnesty Return No. 34-F-00146-41
and Supplemental Tax Amnesty Return No. 34-F-00146-64-B, and paid the
corresponding amnesty taxes due.
Prior to this availment, petitioner Commissioner of Internal Revenue, in a
communication received by private respondent on 13 August 1986, assessed
the latter deficiency income and business taxes for its fiscal years ended 30
September 1981 and 30 September 1982 in an aggregate amount of
P1,410,157.71. The taxpayer wrote back to state that since it had been able
to avail itself of the tax amnesty, the deficiency tax notice should forthwith
be cancelled and withdrawn. The request was denied by the Commissioner,
in his letter of 22 November 1988, on the ground that Revenue Memorandum
Order No. 4-87, dated 09 February 1987, implementing Executive Order No.
41, had construed the amnesty coverage to include only assessments issued
by the Bureau of Internal Revenue after the promulgation of the executive
order on 22 August 1986 and not to assessments theretofore made.
ISSUE
WON the CIR has erred in denying the private respondents tax amnesty
claim.
HELD
Yes. If, as the Commissioner argues, Executive Order No. 41 had not been
intended to include 1981-1985 tax liabilities already assessed
(administratively) prior to 22 August 1986, the law could have simply so
provided in its exclusionary clauses. It did not. The conclusion is unavoidable,
and it is that the executive order has been designed to be in the nature of a
general grant of tax amnesty subject only to the cases specifically excepted
by it.
All issuances must not override, but must remain consistent and in harmony
with, the law they seek to apply and implement. Administrative rules and
regulations are intended to carry out, neither to supplant nor to modify, the
law.
Ople v Torres
FACTS
Administrative Order No. 308, entitled "Adoption of a National Computerized
Identification Reference System," was issued by President Fidel Ramos On December 12, 1996.
Senator Blas F. Ople filed a petition seeking to invalidate A.O. No. 308 on several grounds. One of
them is that: The establishment of a National Computerized Identification Reference System
requires a legislative act. The issuance of A.O. No.308 by the President is an unconstitutional
usurpation of the legislative powers of congress. Petitioner claims that A.O. No. 308 is not a mere
administrative order but a law and hence, beyond the power of the President to issue. He alleges
that A.O. No.308 establishes a system of identification that is all-encompassing in scope, affects
the life and liberty of every Filipino citizen and foreign resident, and more particularly, violates
their right to privacy.
On this point, respondents counter-argue that: A.O. No. 308 was issued within the executive
and administrative powers of the president without encroaching on the legislative powers of
congress.
ISSUE
Whether the issuance of A.O. No. 308 is an unconstitutional usurpation of the power of Congress
to legislate.
HELD
Legislative power is the authority to make laws, and to alter and repeal them. The Constitution
has vested this power in the Congress. The grant of legislative power to Congress is broad,
general, and comprehensive. Any power deemed to be legislative by usage and tradition, is
necessarily possessed by Congress, unless the Constitution has lodged it elsewhere.
The executive power, on the other hand, is vested in the President. It is generally defined as the
power to enforce and administer the laws. It is the power of carrying the laws into practical
operation and enforcing their due observance. As head of theExecutive Department, the
President is the Chief Executive. He represents the government as a whole and sees to it that all
laws are enforced by the officials andemployees of his department. He has control over the
executive department, bureausand offices. Corollary to the power of control, the President also
has the duty of supervising the enforcement of laws for the maintenance of general peace and
publicorder. Thus, he is granted administrative power over bureaus and offices under hiscontrol
to enable him to discharge his duties effectively.
Administrative power is concerned with the work of applying policies and
enforcingorders as determined by proper governmental organs. It enables the President to fix
auniform standard of administrative efficiency and check the official conduct of hisagents. To this
end, he can issue administrative orders, rules and regulations.
From these precepts, the Court holds that A.O. No. 308 involves a subject that is notappropriate
to be covered by an administrative order.
An administrative order is an ordinance issued by the President which relates to
specificaspects in the administrative operation of government. It must be in harmony with
thelaw and should be for the sole purpose of implementing the law and carrying out
thelegislative policy. The Court rejects the argument that A.O. No. 308 implements thelegislative
policy of the Administrative Code of 1987. The Code is a general law andincorporates in a unified
document the major structural, functional and proceduralprinciples of governance and embodies
changes in administrative structure andprocedures designed to serve the people.
It cannot be simplistically argued that A.O. No. 308 merely implements the
Administrative Code of 1987. It establishes for the first time a National
Computerized Identification Reference System. Such a System requires a
delicate adjustment of various contending state policies - the primacy of
A fortiori, the granting of the mid-week races does not require another legislative
act to reiterate the manner of allocating the proceeds of betting tickets. Neither
does the allocation of breakages under the same provision need to be isolated to
construe another distribution scheme. No law can be viewed in a condition of
isolation or as the beginning of a new legal system.
Proceeding to the subsidiary issue, the period for the remittance of breakages to the
beneficiaries should have commenced from the time PHILRACOM authorized the
holding of mid-week races because R.A. Nos. 6631 and 6632 were already in effect
then. The petitioners contend that they cannot be held retroactively liable to
respondent PHILRACOM for breakages prior to the effectivity of E.O. Nos. 88 and 89.
They assert that the real intent behind E.O. Nos. 88 and 89 was to favor the
respondent PHILRACOM anew with the benefits which formerly had accrued in favor
of Philippine Amateur Athletic Federation (PAAF). They opine that since laws operate
prospectively unless the legislator intends to give them retroactive effect, the
accrual of these breakages should start on December 16, 1986, the date of
effectivity of E.O. Nos. 88 and 89. Now, even if one of the benefactors of breakages,
the PAAF, as provided by R.A. 6631 and 6632 had ceased operation, it is still not
proper for the petitioners to presume that they were entitled to PAAFs share. When
the petitioners mistakenly appropriated the breakages for themselves, they became
the implied trustees for those legally entitled to the proceeds.
While herein petitioners might have relied on a prior opinion issued by an
administrative body, the well-entrenched principle is that the State could not be
estopped by a mistake committed by its officials or agents. Although there was an
initial interpretation of the law by PHILRACOM, a court of law could not be precluded
from setting that interpretation aside if later on it is shown to be inappropriate.
Mauricio Cruz vs. Stanton Youngberg
GR No. L-34674 October 26, 1931
FACTS: Petitioner attacked the constitutionality of Act No. 3155, which prohibits the importation
of cattle from foreign countries into the Philippine Islands. It was enacted for the purpose of
preventing the introduction of cattle diseases into the Philippine Islands from foreign countries.
The Act provides: SECTION 1. After March thirty-first, nineteen hundred and twenty-five
existing contracts for the importation of cattle into this country to the contrary notwithstanding, it
shall be strictly prohibited to import, bring or introduce into the Philippine Islands any cattle from
foreign countries: Provided, however, That at any time after said date, the Governor-General,
with the concurrence of the presiding officers of both Houses, may raise such prohibition entirely
or in part if the conditions of the country make this advisable or if decease among foreign cattle
has ceased to be a menace to the agriculture and livestock of the lands.
ISSUE: Whether or not the power given by Act No. 3155 to the Governor-General to suspend or
not, at his discretion, the prohibition provided in the act constitutes an unlawful delegation of the
legislative powers.
HELD: No. The true distinction is between the delegation of power to make the law, which
necessarily involves a discretion as to what it shall be, and conferring an authority or discretion
as to its execution, to be exercised under and in pursuance of the law. The first cannot be done;
to the latter no valid objection can be made. The Governor-General is authorized to lift the
prohibition, with the consent of the presiding officers of the legislature, if he should determine
after a fact-finding investigation that there was no longer any threat of contagion from cattle. The
lifting of the ban would have been effected through a contingent regulation based on the
prescribed contingency, to wit, the finding that foreign cattle would no longer contaminate the
local livestock.
SALVADOR A. ARANETA, ETC., ET AL. vs. THE HON. MAGNO S. GATMAITAN, ET AL.
G.R. Nos. L-8895 and L-9191, April 30, 1957
Facts: The League of Municipal Mayors of municipalities near the San Miguel Bay, between the
provinces of Camarines Sur and Camarines Norte, manifested in a resolution that they condemn
the operation of trawls in the said area and resolving to petition the President of the Philippines to
regulate fishing in San Miguel Bay. In another resolution, the same League of Mayors prayed that
the President ban the operation of trawls in the San Miguel Bay area. In response to the pleas, the
President issued EO 22 prohibiting the use of trawls in San Miguel Bay but the EO was amended
by EO 66 apparently in answer to a resolution of the Provincial Board of Camarines Sur
recommending the allowance of trawl-fishing during the typhoon season only. Subsequently, EO
80 was issued reviving EO 22. Thereafter, a group of Otter trawl operators filed a complaint for
injunction praying that the Secretary of Agriculture and Natural Resources and Director of
Fisheries be enjoined from enforcing said executive order and to declare the same null and void.
The Court held that until the trawler is outlawed by legislative enactment, it cannot be banned
from San Miguel Bay by executive proclamation and held that the EOs 22 and 66 are invalid.
Issues: Whether or not the President has authority to issue EOs 22, 66 and 80. Whether or not
the said Executive Orders were valid as it was not in the exercise of legislative powers unduly
delegated to the President.
Held: Yes. Under sections 75 and 83 of the Fisheries law, the restriction and banning of trawl
fishing from all Philippine waters come within the powers of the Secretary of Agriculture and
Natural Resources. However, as the Secretary of Agriculture and Natural Resources exercises its
functions subject to the general supervision and control of the President of the Philippines, the
President can exercise the same power and authority through executive orders, regulations,
decrees and proclamations upon recommendation of the Secretary concerned. Hence, EOs 22,66
and 80 restricting and banning of trawl fishing from San Miguel Bay are valid and issued by
authority of law. For the protection of fry or fish eggs and small immature fishes, Congress
intended with the promulgation of the Fisheries Act, to prohibit the use of any fish net or fishing
devise like trawl nets that could endanger and deplete our supply of seafood, and to that end
authorized the Secretary of Agriculture and Natural Resources to provide by regulations and such
restrictions as he deemed necessary in order to preserve the aquatic resources of the land. When
the President, in response to the clamor of the people and authorities of Camarines Sur issued
EO 80 absolutely prohibiting fishing by means of trawls in all waters comprised within the San
Miguel Bay, he did nothing but show an anxious regard for the welfare of the inhabitants of said
coastal province and dispose of issues of general concern which were in consonance and strict
conformity with the law.
No. 9155. Under the law, a division superintendent has the authority and responsibility to hire,
place, and evaluate all division supervisors and district supervisors as well as all employees in
the division, both teaching and non-teaching personnel, including school heads. A school head is
a person responsible for the administrative and instructional supervision of the schools or cluster
of schools. The division superintendent, on the other hand, supervises the operation of all public
and private elementary, secondary, and integrated schools and learning centers.
Echegaray v Secretary
Facts:
The SC affirmed the conviction of petitioner Leo Echegaray y Pilo for the crime of rape of the 10
year-old daughter of his common-law spouse and the imposition upon him of the death penalty
for the said crime.
He filed an MFR and a supplemental MFR raising for the first time the issue of the
constitutionality of Republic Act No. 7659 and the death penalty for rape.
In the meantime, Congress had seen it fit to change the mode of execution of the death penalty
from electrocution to lethal injection, and passed Republic Act No. 8177, AN ACT
DESIGNATING DEATH BY LETHAL INJECTION AS THE METHOD OF CARRYING OUT
CAPITAL PUNISHMENT, AMENDING FOR THE PURPOSE ARTICLE 81 OF THE
REVISED PENAL CODE, AS AMENDED BY SECTION 24 OF REPUBLIC ACT NO. 7659.
The convict filed a Petition for prohibition from carrying out the lethal injection against him
under the grounds that it constituted cruel, degrading, or unusual punishment, being violative of
due process, a violation of the Philippines' obligations under international covenants, an undue
delegation of legislative power by Congress, an unlawful exercise by respondent Secretary of the
power to legislate, and an unlawful delegation of delegated powers by the Secretary of Justice to
respondent Director.
ISSUE
WON RA 8177 constitutes an undue delegation of legislative power?
HELD
No. R.A. No. 8177 likewise provides the standards which define the legislative policy, mark its
limits, map out its boundaries, and specify the public agencies which will apply it. It indicates
the circumstances under which the legislative purpose may be carried out. R.A. No. 8177
specifically requires that "the death sentence shall be executed under the authority of the Director
of the Bureau of Corrections, endeavoring so far as possible to mitigate the sufferings of the
person under the sentence during the lethal injection as well as during the proceedings prior to
the execution." Further, "the Director of the Bureau of Corrections shall take steps to ensure that
the lethal injection to be administered is sufficient to cause the instantaneous death of the
convict." The legislature also mandated that "all personnel involved in the administration of
lethal injection shall be trained prior to the performance of such task." The Court cannot see that
any useful purpose would be served by requiring greater detail. The question raised is not the
definition of what constitutes a criminal offense, but the mode of carrying out the penalty already
imposed by the Courts. In this sense, R.A. No. 8177 is sufficiently definite and the exercise of
discretion by the administrative officials concerned is, canalized within banks that keep it from
overflowing.
However, the Rules and Regulations to Implement Republic Act No. 8177 suffer serious flaws
that could not be overlooked. To begin with, something basic appears missing in Section 19 of
the implementing rules which provides a manual for the execution procedure. It was supposed to
be confidential.
The Court finds in the first paragraph of Section 19 of the implementing rules a vacuum. The
Secretary of Justice has practically abdicated the power to promulgate the manual on the
execution procedure to the Director of the Bureau of Corrections, by not providing for a mode of
review and approval. Being a mere constituent unit of the Department of Justice, the Bureau of
Corrections could not promulgate a manual that would not bear the imprimatur of the
administrative superior, the Secretary of Justice as the rule-making authority under R.A. No.
8177. Such apparent abdication of departmental responsibility renders the said paragraph
invalid.
De Jesus v COA
FACTS
Petitioners are employees of the Local Water Utilities Administration (LWUA).
Prior to July 1, 1989, they were receiving honoraria as designated members
of the LWUA Board Secretariat and the Pre-Qualification, Bids and Awards
Committee.
On July 1, 1989, Republic Act No. 6758 (Rep. Act 6758), entitled An Act
Prescribing A Revised Compensation and Position Classification System in the
Government and For Other Purposes, took effect. Section 12 of said law
provides for the consolidation of allowances and additional compensation
into standardized salary rates. Certain additional compensations, however,
were exempted from consolidation.
To implement Rep. Act 6758, the Department of Budget and Management
(DBM) issued Corporate Compensation Circular No. 10 (DBM-CCC No. 10),
discontinuing without qualification effective November 1, 1989, all
allowances and fringe benefits granted on top of basic salary.
Petitioners contend that DBM-CCC No. 10 is inconsistent with the provisions of Rep. Act 6758
(the law it is supposed to implement) and, therefore, void. And it is without force and effect
because it was not published in the Official Gazette.
ISSUE
WON the Circular is void.
HELD
YES. On the need for publication of subject DBM-CCC No. 10, we rule in the affirmative.
Following the doctrine enunciated in Tanada, publication in the Official Gazette or in a
newspaper of general circulation in the Philippines is required since DBM-CCC No. 10 is in the
nature of an administrative circular the purpose of which is to enforce or implement an existing
law. Stated differently, to be effective and enforceable, DBM-CCC No. 10 must go through the
requisite publication in the Official Gazette or in a newspaper of general circulation in the
Philippines.
In the present case under scrutiny, it is decisively clear that DBM-CCC No. 10, which completely
disallows payment of allowances and other additional compensation to government officials and
employees, starting November 1, 1989, is not a mere interpretative or internal regulation. It is
something more than that. And why not, when it tends to deprive government workers of their
allowances and additional compensation sorely needed to keep body and soul together. At the
very least, before the said circular under attack may be permitted to substantially reduce their
income, the government officials and employees concerned should be apprised and alerted by
the publication of subject circular in the Official Gazette or in a newspaper of general circulation
in the Philippines - to the end that they be given amplest opportunity to voice out whatever
opposition they may have, and to ventilate their stance on the matter. This approach is more in
keeping with democratic precepts and rudiments of fairness and transparency.
FACTS: This is a case involving the validity of a 1967 regulation, penalizing electro fishing in
fresh water fisheries, promulgated by the Secretary of Agriculture and Natural Resources and
the Commissioner of Fisheries under the old Fisheries Law. On March 7, 1969 Jose
Buenaventura, Godofredo Reyes, Benjamin Reyes, Nazario Aquino and Carlito del Rosario
were charged by a Constabulary investigator in the municipal court of Sta. Cruz, Laguna with
having violated Fisheries Administrative Order No. 84-1.It was alleged in the complaint that the
five accused in the morning of March 1, 1969 resorted to electro fishing in the waters of Barrio
San Pablo Norte, Sta. Cruz. Upon motion of the accused, the municipal court quashed the
complaint. The prosecution appealed. The Court of First Instance of Laguna affirmed the order
of dismissal. The lower court held that electro fishing cannot be penalize because electric
current is not an obnoxious or poisonous substance as contemplated in Section 11 of the
Fisheries Law and that it is not a substance at all but a form of energy conducted or transmitted
by substances. The lower court further held that, since the law does not clearly prohibit electro
fishing, the executive and judicial departments cannot consider it unlawful. It is noteworthy that
the Fisheries Law does not expressly punish .electro fishing. Notwithstanding the silence of the
law, the Secretary of Agriculture and Natural Resources, upon the recommendation of the
Commissioner of Fisheries, promulgated Fisheries Administrative Order No. 84, prohibiting
electro fishing in all Philippine waters. On June 28, 1967 the Secretary of Agriculture and
Natural Resources, upon the recommendation of the Fisheries Commission, issued Fisheries
Administrative Order No. 84-1, amending section 2 of Administrative Order No. 84, by restricting
the ban against electro fishing to fresh water fisheries.
ISSUE: Whether or not the Secretary of Agriculture and Natural Resources and the
Commissioner of Fisheries exceeded their authority in issuing the Fisheries Administrative
Orders Nos. 84 and 84-1.
HELD: The Court ruled in the affirmative. The Secretary of Agriculture and Natural Resources
and the Commissioner of Fisheries exceeded their authority in issuing Fisheries Administrative
Orders Nos. 84 and 84-1 and that those orders are not warranted under the Fisheries
Commission, Republic Act No. 3512. The reason is that the Fisheries Law does not expressly
prohibit electro fishing. As electro fishing is not banned under that law, the Secretary of
Agriculture and Natural Resources and the Commissioner of Fisheries are powerless to
penalize it. In other words, Administrative Orders Nos. 84 and 84-1, in penalizing electro fishing,
are devoid of any legal basis. That law punishes (1) the use of obnoxious or poisonous
substance, or explosive in fishing; (2) unlawful fishing in deep-sea fisheries; (3) unlawful taking
of marine molusca, (4) illegal taking of sponges; (5) failure of licensed fishermen to report the
kind and quantity of fish caught, and (6) other violations. Nowhere in that law is electro fishing
specifically punished. Administrative regulations adopted under legislative authority by a
particular department must be in harmony with the provisions of the law, and should be for the
sole purpose of carrying into effect its general provisions. The rule-making power must be
confined to details for regulating the mode or proceeding to carry into effect the law as it has
been enacted. The power cannot be extended to amending or expanding the statutory
requirements or to embrace matters not covered by the statute. Rules that subvert the statute
cannot be sanctioned. Thus, the lawmaking body cannot delegate to an executive official the
power to declare what acts should constitute an offense. It can authorize the issuance of
regulations and the imposition of the penalty provided for in the law itself.
Issue: WON it was necessary for BIR to follow the legal requirements when it
issued its RMC
Held. YES. CIR may not disregard legal requirements in the exercise of its
quasi-legislative powers which publication, filing, and prior hearing.
When an administrative rule is merely interpretative in nature, its
applicability needs nothing further than its bare issuance for it gives no real
consequence more than what the law itself has already prescribed. BUT
when, upon the other hand, the administrative rule goes beyond merely
providing for the means that can facilitate or render least cumbersome the
implementation of the law but substantially increases the burden of those
governed, the agency must accord, at least to those directly affected, a
chance to be heard, before that new issuance is given the force and effect of
law.
RMC 37-93 cannot be viewed simply as construing Section 142(c)(1) of the
NIRC, as amended, but has, in fact and most importantly, been made in order
to place "Hope Luxury," "Premium More" and "Champion" within the
classification of locally manufactured cigarettes bearing foreign brands and
to thereby have them covered by RA 7654 which subjects mentioned brands
to 55% the BIR not simply interpreted the law; verily, it legislated under its
quasi-legislative authority. The due observance of the requirements of notice,
of hearing, and of publication should not have been then ignored.
Misamis Oriental Association of Coco Traders, Inc. vs. Department of Finance Secretary
238 SCRA 63
Facts: Petitioner Misamis Oriental Association of Coco Traders, Inc. is a domestic corporation
whose members, individually or collectively, are engaged in the buying and selling of copra in
Misamis Oriental. On the other hand, respondents represent departments of the executive
branch of government charged with the generation of funds and the assessment, levy and
collection of taxes and other imposts. It alleges that prior to the issuance of Revenue
Memorandum Circular (RMC) 47-91 on June 11, 1991, which implemented Value Added Tax
(VAT) Ruling 190-90, copra was classified as agricultural food product under Section 103(b) of
the National Internal Revenue Code and, therefore, exempt from VAT at all stages of production
or distribution. The petitioner contends that the Bureau of Food and Drug of the Department of
Health and not the Bureau of Internal Revenue (BIR) is the competent government agency to
determine the proper classification of food products. It cites the opinion of Dr. Quintin Kintanar of
the Bureau of Food and Drug to the effect that copra should be considered "food" because it is
produced from coconut which is food and 80% of coconut products are edible. The respondents,
on the contrary, argue that the opinion of the BIR, as the government agency charged with the
implementation and interpretation of the tax laws, is entitled to great respect. Likewise,
petitioner claims that RMC No. 47-91 is discriminatory and violative of the equal protection
clause of the Constitution because while coconut farmers and copra producers are exempt,
traders and dealers are not, although both sell copra in its original state. Petitioners add that oil
millers do not enjoy tax credit out of the VAT payment of traders and dealers. Thus, the present
petition for prohibition and injunction seeking to nullify Revenue Memorandum Circular No. 4791 and enjoin the collection by respondent revenue officials of the Value Added Tax (VAT) on the
sale of copra by members of petitioner organization.
Issues:
1. Is copra an agricultural food product for purposes of the provisions of the National Internal
Revenue Code (NIRC), thus exempting the petitioner from payment of the Value Added Tax
(VAT)?
2. Whether or not the opinion of the Commissioner of Internal Revenue should be accorded
respect in interpreting the provisions of the National Internal Revenue Code.
3. Is RMC No. 47-91 violative of the equal protection clause?
4. Are oil millers exempt from payment of the Value Added Tax (VAT)?
Held:
1. In the case at bar, we find no reason for holding that respondent Commissioner erred in not
considering copra as an "agricultural food product" within the meaning of Section 103(b) of the
NIRC. As the Solicitor General contends, "copra per se is not food, that is, it is not intended for
human consumption. Simply stated, nobody eats copra for food." That previous Commissioners
considered it so is not reason for holding that the present interpretation is wrong. The
Commissioner of Internal Revenue is not bound by the ruling of his predecessors. To the
contrary, the overruling of decisions is inherent in the interpretation of laws. Under Section
103(a) of the National Internal Revenue Code, the sale of agricultural non-food products in their
original state is exempt from VAT only if the sale is made by the primary producer or owner of
the land from which the same are produced. The sale made by any other person or entity, like a
trader or dealer, is not exempt from the tax. On the other hand, under Section 103(b) the sale of
agricultural food products in their original state is exempt from VAT at all stages of production or
distribution regardless of who the seller is. The reclassification had the effect of denying to the
petitioner the exemption it previously enjoyed when copra was classified as an agricultural food
product under Section 103(b) of the National Internal Revenue Code.
2. The Supreme Court ruled in the affirmative. In interpreting Section 103(a) and (b) of the
National Internal Revenue Code, the Commissioner of Internal Revenue gave it a strict
construction consistent with the rule that tax exemptions must be strictly construed against the
taxpayer and liberally in favor of the state.
Moreover, as the government agency charged with the enforcement of the law, the opinion of
the Commissioner of Internal Revenue, in the absence of any showing that it is plainly wrong, is
entitled to great weight. Indeed, the ruling was made by the Commissioner of Internal Revenue
in the exercise of his power under Section 245 of the NIRC to "make rulings or opinions in
connection with the implementation of the provisions of internal revenue laws, including rulings
on the classification of articles for sales tax and similar purposes."
3. The Supreme Court ruled in the negative. There is a material or substantial difference
between coconut farmers and copra producers, on the one hand, and copra traders and
dealers, on the other. The former produce and sell copra, the latter merely sell copra. The
Constitution does not forbid the differential treatment of persons so long as there is a
reasonable basis for classifying them differently.
4. It is not true that oil millers are exempt from VAT. Pursuant to Section 102 of the National
Internal Revenue Code, they are subject to 10% VAT on the sale of services. Under Section 104
of the Tax Code, they are allowed to credit the input tax on the sale of copra by traders and
dealers, but there is no tax credit if the sale is made directly by the copra producer as the sale is
VAT exempt. In the same manner, copra traders and dealers are allowed to credit the input tax
on the sale of copra by other traders and dealers, but there is no tax credit if the sale is made by
the producer.