11 - CIR v CA.pdf - THIRD DIVISION[G.R No 107135...

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THIRD DIVISION[G.R. No. 107135. February 23, 1999.]COMMISSIONER OF INTERNAL REVENUECOMMISSIONER OF INTERNAL REVENUE,petitioner, vsvs. THE COURT. THE COURTOF APPEALS, CENTRAL VEGETABLE MANUFACTURING CO., INC.,OF APPEALS, CENTRAL VEGETABLE MANUFACTURING CO., INC.,and THE COURT OF TAX APPEALSand THE COURT OF TAX APPEALS,respondents.The Solicitor General for petitioner.Misa Castro & Associatesfor private respondent.SYNOPSISSYNOPSISPrivate respondent Central Vegetable Oil Manufacturing Co., Inc. (CENVOCO) is amanufacturer of edible oil and coconut, coprameal cake and such other coconut related oilsubject to the miller tax of 3%. In 1986, CENVOCO purchased a speci?ed number ofcontainers and packaging materials for its edible oil from its suppliers, and paid the salestax due thereon. After an investigation by the Revenue Examiner, CENVOCO was assessedfor de?ciency miller's tax in the total amount of P1,575,514.70. CENVOCO wrote petitionera letter requesting for reconsideration, contending that the ?nal provision of Section 168of the Tax Code does not apply to sales tax paid on containers and packaging materials,hence, the amount paid therefor should have been credited against the miller's taxassessed against it. Petitioner, through a letter, reiterated the validity of its assessment.Dissatis?ed, CENVOCO ?led a petition for review with the Court of Tax Appeals, whichcame out with a decision in favor of CENVOCO. Petitioner appealed to the Court ofAppeals. The assailed decision was affirmed in toto. DHITcSThe Supreme Court dismissed the petition and aDrmed the decision of the Court ofAppeals. The law relied upon by the BIR Commissioner as the basis for not allowingCENVOCO's tax credit is just a proviso of Section 168 of the old Tax Code. The restrictionin said proviso, however, is limited only to sales, miller's or excise taxes paid "on rawmaterials used in the milling process." The Court ruled that under the rules of statutoryconstruction, exceptions as a general rule, should be strictly but reasonably construed.They extend only so far as their language fairly warrants, and all doubts should be resolvedin favor of the general provisions rather than the exception. The exception provided for insection 168 of the old Tax Code should be strictly construed. The Court also ruled that it isa basic rule of interpretation that words and phrases used in the statute in the absence ofa clear legislative intent to the contrary, should be given their plain, ordinary and commonusage or meaning. Cans and tetrapaks are not used in the manufacture of CENVOCO's?nished products which are coconut, edible oil or coprameal cake. Such ?nished productsare packed in cans and tetrapaks. There is no error in allowing the sales taxes paid on thecontainers and packaging materials of the milled products should be credited against themiller's tax due thereon.

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