Insular v. CTA Digest

Insular v CTA

G.R. No. L-31057 May 29, 1981

Facts:

1.  Petitioner is a licensed forest concessionaire engaged in the purchase of manufactured oil and motor fuel used in the operation of its forest concession, sawmill, planning mills, power units, vehicles, dry kilns, water pumps, lawn mowers and in furnishing free water and light to its employees on which a specific tax was paid.

2.   Petitioner filed with the CIR a claim for refund of P19,921.37 representing 25% of the specific tax paid on the manufactured oil and fuel used in its operations pursuant to the provisions of Section 5, RA 1435. CIR denied the Company's claim for refund on the ground that the privilege of partial tax refund refer to those using oil in the operation of forest and mining concessions is limited to a period of five (5) years from June 14, 1956, the date effectivity of said Act. Consequently, oil used in such concession after June 14, 1961 are subject to the full tax prescribed in Section 142 of the National Internal Revenue Code.

3.  Petitioner filed a petition for review before the respondent court and CTA ruled that the operation of a sawmill is distinct from the operation of a forest concession, hence, the refund provision of Section 5 of RA 1435 allowing partial refund to forest and mining concessionaires cannot be extended to the operators of a sawmill. And out of the P19,921.37 claimed, representing the 25% of specific tax paid, respondent court found out that only the amount of P14,598.08 was paid on oil utilized in logging operations. Respondent court, however, did not allow the refund of the full amount of P14,598.08 because the Company's right to claim the refund of a portion thereof, had already prescribed. Hence, the Company was credited the refund of P10,560.20 only. Both parties appealed from the decision of the Court of Tax Appeals.

4.  R.A. No. 1435 is "An Act to Provide Means for Increasing The Highway Special Fund." The Commissioner contends that the subject of RA 1435 was to increase Highway Special Fund. However, Section 5 of, the Act deals with another subject which is the partial exemption of miners and loggers. And tills partial exemption on which the Company based its claim for refund is clearly not expressed in the title of the aforesaid Act. More importantly, Section 5 provides for a decrease rather than an increase of the Highway Special Fund.

5.  The CTA ordered the CIR to refund to the petitioner the amount of P10,560.20 instead of P19,921.37, representing 25% of the specific tax paid on manufactured oil and motor fuel utilized by said company in the operation of its forest concession in the year 1963.

ISSUE: Whether or not Sec. 5 of the act is unconstitutional

NO.

1.  RA 1435 deals with only one subject and proclaims just one policy, namely, the necessity for increasing the Highway Special Fund through the imposition of an increased specific tax on manufactured oils. The proviso in Section 5 of the law is in effect a partial exemption from the imposed increased tax. Said proviso, which has reference to specific tax on oil and fuel, is not, a deviation from the general subject of the law. The primary purpose of the aforequoted constitutional provision is to prohibit duplicity in legislation the title of which might completely fail to apprise the legislators or the public of the nature, scope and consequences of the law or its operation. 

2. In deciding the constitutionality of a statute alleged to be defectively titled, every presumption favors the validity of the Act. As is true in cases presenting other constitutional issues, the courts avoid declaring an Act unconstitutional whenever possible. Where there is any doubt as to the insufficiency of either the title, or the Art, the legislation should be sustained.