Ancheta, Eros Freuy B.

Statutory Construction
How a require of title is construed
Insular Lumber Co. Vs Court of Appeals 104 SCRA 710
Facts:
Insular Lumber Company, purchased manufactured oil and motor fuel which it 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 specific tax was paid.
In 1956, Republic Act No. 1435 was passed. Section 5 thereof provides that there
should be a partial tax refund to those using oil in the operation of forest and mining
concessions.
On December 22, 1964, the Company filed with the Commissioner of Internal
Revenue, claiming 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, Republic Act No. 1435
The commissioner denied the Company's claim for refund on the ground that the
privilege of partial tax refund granted by Section 5 of Republic Act No. 1435 is only
effective 5 years from its enactment. Hence, in 1961 the said the date effectivity of
said has expired. 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.
On April 29, 1965, the petitioners appealed the issue to the CTA (Court of Tax
Appeals) and the CTA ruled that the provision of the said Republic Act cannot be
extended to the operators of the sawmill. In return, the CTA credited 10,562.20 PHP
to the company only because the right of the companys claim of a refund
particularly those paid in Jan. 1, 1962 to April 29, 1963 had already prescribed.
CIR assigns the following errors:
1. The CTA erred in not holding RA 1435 invoked by the Insular Lumber
Company as legal basis for tax refund is null and void for being
unconstitutional
2. The CTA erred in not holding that the partial exemption of miners and forest
concessionaries under RA 1435 is limited only to 5 years from June 14,1956
3. The CTA erred in not holding that the Insular Lumber Companys claim for the
used oil and fuels in question, has already expired and no longer in force
4. The CTA erred in holding that the company is entitled to the tax refund of
10,560.20 PHP
The Company, as appellant assigned the following errors:
1. The CTA erred in ruling that the company is not entitled of the specific tax
refund in the operation of its sawmill.
2. The CTA erred in holding that the claim for refund on tax has already
prescribed on the periods from Jan 1, 1963 to April 29, 1963.

Ancheta, Eros Freuy B.

Statutory Construction
3. The CTA erred in CIR to refund to the petitioner only 10,560.20 instead of
19,921.37 as claimed by the Petitioner.

ISSUE:
Whether or not to grant the Partial Tax Refund to ILC

HELD.
Yes, but only in the amount as found by the CTA. The Supreme Court ruled that
there is no merit in the contention of the CIR. 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 Sec 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. But that is not so for in the passage of RA 1435 since, as the records of
its proceedings bear out, a full debate on precisely the issue of whether its title
reflects its complete subject was held by Congress which passed it.

Ancheta, Eros Freuy B.

Statutory Construction
Issue/s:
Whether or not the Insular Lumber Co. is entitled of the full tax refund
pursuant to RA 143
Whether or not that the provision of RA 1435 is constitutional
Assuming that RA 1435 is unconstitutional, what tax refund shall be granted
to Insular Lumber Co.?
Ruling: