Cir Vs Cenvoco GR No. 107135 Facts

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CIR VS CENVOCO

GR No. 107135

FACTS:

 Petitioner Central Vegetable Oil Manufacturing Co. (CENVOCO) is a


manufacturer of coconut oil, subject to the miller’s tax of 3%
 Petitioner purchased containers and packaging materials for its edible oil and
paid the sales tax due thereon.
 An Assessment notice was issued against petitioner for miller’s tax deficiency.
 Petitioner filed a letter requesting for reconsideration of the deficiency,
contending that Section 168 of 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 tax assessed against it.
 Respondent CIR wrote to CENVOCO that under Section 168 of the Tax Code
provides that sales, miller’s, or excise taxes paid on raw materials or supplies
used in the milling process shall not be allowed against the miller’s tax due.
o That since the law specifically does not allow taxes paid on the raw
materials or supplies used in the milling process as a credit against the
miller’s tax due, with more reasons should the sales taxes paid on
materials not used in the milling process be allowed as a credit against
the miller’s tax due. There is no provision of law which allows such a
credit-to-be made.
 Petitioner filed a petition for review with the Court of Tax Appeals, which held
that petitioner CENVOCO is not liable for deficiency miller’s tax.
o It held that containers and packages cannot be considered “raw
materials” utilized in the milling process.
 Appealed to the CA, the decision of the CTA was affirmed.

ISSUE:

Whether or not the sales tax paid by CENVOCO when it purchased containers and
packaging materials for its milled products can be credited against the deficiency
miller’s tax due thereon.

HELD:

YES.

Under Section 168 of the Old Tax Code, the restriction in the said provision, however
is limited only to sales, miller’s, or excise taxes paid “on raw materials used in the
milling process”.

Under the rules of statutory construction, exceptions, as a general rule, should be


strictly but reasonably construed. That all doubts should be resolved in favor of the
general provisions rather than the exception. Where a general rule is established by
statute with exceptions, the court will not curtail the former nor add to the latter by
implication.
The exception provided for in Section 168 of the old Tax Code should thus be strictly
construed. Conformably, the sales, miller’s and excise taxes paid on all other
materials, such as the sales taxes paid on containers and packaging materials of the
milled products under consideration, may be credited against the millers’s tax due
therefor.

The basic rule of interpretation that words and phrases used in the statute, in the
absence of clear legislative intent to the contrary, should be given their plain,
ordinary, and common usage or meaning.

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