G.R. No.

L-75697

VALENTIN TIO doing business under the name and style of OMI ENTERPRISES, petitioner,
vs.
VIDEOGRAM REGULATORY BOARD, MINISTER OF FINANCE, METRO MANILA COMMISSION, CITY
MAYOR and CITY TREASURER OF MANILA, respondents.

Nelson Y. Ng for petitioner.

The City Legal Officer for respondents City Mayor and City Treasurer.

MELENCIO-HERRERA, J.:

This petition was filed on September 1, 1986 by petitioner on his own behalf and purportedly on behalf
of other videogram operators adversely affected. It assails the constitutionality of Presidential Decree No.
1987 entitled "An Act Creating the Videogram Regulatory Board" with broad powers to regulate and
supervise the videogram industry (hereinafter briefly referred to as the BOARD). The Decree was
promulgated on October 5, 1985 and took effect on April 10, 1986, fifteen (15) days after completion of
its publication in the Official Gazette.

On November 5, 1985, a month after the promulgation of the abovementioned decree, Presidential
Decree No. 1994 amended the National Internal Revenue Code providing, inter alia:

SEC. 134. Video Tapes. — There shall be collected on each processed video-tape cassette, ready for
playback, regardless of length, an annual tax of five pesos; Provided, That locally manufactured or
imported blank video tapes shall be subject to sales tax.

On October 23, 1986, the Greater Manila Theaters Association, Integrated Movie Producers, Importers
and Distributors Association of the Philippines, and Philippine Motion Pictures Producers Association,
hereinafter collectively referred to as the Intervenors, were permitted by the Court to intervene in the
case, over petitioner's opposition, upon the allegations that intervention was necessary for the complete
protection of their rights and that their "survival and very existence is threatened by the unregulated
proliferation of film piracy." The Intervenors were thereafter allowed to file their Comment in
Intervention.

The rationale behind the enactment of the DECREE, is set out in its preambular clauses as follows:

1. WHEREAS, the proliferation and unregulated circulation of videograms including, among others,
videotapes, discs, cassettes or any technical improvement or variation thereof, have greatly prejudiced
the operations of moviehouses and theaters, and have caused a sharp decline in theatrical attendance by
at least forty percent (40%) and a tremendous drop in the collection of sales, contractor's specific,
amusement and other taxes, thereby resulting in substantial losses estimated at P450 Million annually in
government revenues;

2. WHEREAS, videogram(s) establishments collectively earn around P600 Million per annum from rentals,
sales and disposition of videograms, and such earnings have not been subjected to tax, thereby depriving
the Government of approximately P180 Million in taxes each year;

3. WHEREAS, the unregulated activities of videogram establishments have also affected the viability of
the movie industry, particularly the more than 1,200 movie houses and theaters throughout the country,
and occasioned industry-wide displacement and unemployment due to the shutdown of numerous
moviehouses and theaters;

4. "WHEREAS, in order to ensure national economic recovery, it is imperative for the Government to
create an environment conducive to growth and development of all business industries, including the
movie industry which has an accumulated investment of about P3 Billion;

5. WHEREAS, proper taxation of the activities of videogram establishments will not only alleviate the dire
financial condition of the movie industry upon which more than 75,000 families and 500,000 workers
depend for their livelihood, but also provide an additional source of revenue for the Government, and at
the same time rationalize the heretofore uncontrolled distribution of videograms;

6. WHEREAS, the rampant and unregulated showing of obscene videogram features constitutes a clear
and present danger to the moral and spiritual well-being of the youth, and impairs the mandate of the
Constitution for the State to support the rearing of the youth for civic efficiency and the development of
moral character and promote their physical, intellectual, and social well-being;

7. WHEREAS, civic-minded citizens and groups have called for remedial measures to curb these blatant
malpractices which have flaunted our censorship and copyright laws;

8. WHEREAS, in the face of these grave emergencies corroding the moral values of the people and
betraying the national economic recovery program, bold emergency measures must be adopted with
dispatch; ... (Numbering of paragraphs supplied).

Petitioner's attack on the constitutionality of the DECREE rests on the following grounds:

1. Section 10 thereof, which imposes a tax of 30% on the gross receipts payable to the local government
is a RIDER and the same is not germane to the subject matter thereof;

2. The tax imposed is harsh, confiscatory, oppressive and/or in unlawful restraint of trade in violation of
the due process clause of the Constitution;

3. There is no factual nor legal basis for the exercise by the President of the vast powers conferred upon
him by Amendment No. 6;

4. There is undue delegation of power and authority;

P. The Decree is an ex-post facto law; and

6. There is over regulation of the video industry as if it were a nuisance, which it is not.

We shall consider the foregoing objections in seriatim.

1. The Constitutional requirement that "every bill shall embrace only one subject which shall be
expressed in the title thereof" 1 is sufficiently complied with if the title be comprehensive enough to
include the general purpose which a statute seeks to achieve. It is not necessary that the title express
each and every end that the statute wishes to accomplish. The requirement is satisfied if all the parts
of the statute are related, and are germane to the subject matter expressed in the title, or as long as
they are not inconsistent with or foreign to the general subject and title. 2An act having a single general
subject, indicated in the title, may contain any number of provisions, no matter how diverse they may
be, so long as they are not inconsistent with or foreign to the general subject, and may be considered
in furtherance of such subject by providing for the method and means of carrying out the general
object." 3 The rule also is that the constitutional requirement as to the title of a bill should not be so
narrowly construed as to cripple or impede the power of legislation. 4 It should be given practical rather
than technical construction. 5

Tested by the foregoing criteria, petitioner's contention that the tax provision of the DECREE is a rider
is without merit. That section reads, inter alia:

Section 10. Tax on Sale, Lease or Disposition of Videograms. — Notwithstanding any provision of law to
the contrary, the province shall collect a tax of thirty percent (30%) of the purchase price or rental rate,
as the case may be, for every sale, lease or disposition of a videogram containing a reproduction of any
motion picture or audiovisual program. Fifty percent (50%) of the proceeds of the tax collected shall
accrue to the province, and the other fifty percent (50%) shall acrrue to the municipality where the tax
is collected; PROVIDED, That in Metropolitan Manila, the tax shall be shared equally by the
City/Municipality and the Metropolitan Manila Commission.

xxx xxx xxx

The foregoing provision is allied and germane to, and is reasonably necessary for the accomplishment
of, the general object of the DECREE, which is the regulation of the video industry through the
Videogram Regulatory Board as expressed in its title. The tax provision is not inconsistent with, nor
foreign to that general subject and title. As a tool for regulation 6 it is simply one of the regulatory and
control mechanisms scattered throughout the DECREE. The express purpose of the DECREE to include
taxation of the video industry in order to regulate and rationalize the heretofore uncontrolled
distribution of videograms is evident from Preambles 2 and 5, supra. Those preambles explain the
motives of the lawmaker in presenting the measure. The title of the DECREE, which is the creation of
the Videogram Regulatory Board, is comprehensive enough to include the purposes expressed in its
Preamble and reasonably covers all its provisions. It is unnecessary to express all those objectives in the
title or that the latter be an index to the body of the DECREE. 7

2. Petitioner also submits that the thirty percent (30%) tax imposed is harsh and oppressive, confiscatory,
and in restraint of trade. However, it is beyond serious question that a tax does not cease to be valid
merely because it regulates, discourages, or even definitely deters the activities taxed. 8 The power to
impose taxes is one so unlimited in force and so searching in extent, that the courts scarcely venture to
declare that it is subject to any restrictions whatever, except such as rest in the discretion of the authority
which exercises it. 9 In imposing a tax, the legislature acts upon its constituents. This is, in general, a
sufficient security against erroneous and oppressive taxation. 10

The tax imposed by the DECREE is not only a regulatory but also a revenue measure prompted by the
realization that earnings of videogram establishments of around P600 million per annum have not been
subjected to tax, thereby depriving the Government of an additional source of revenue. It is an end-user
tax, imposed on retailers for every videogram they make available for public viewing. It is similar to the
30% amusement tax imposed or borne by the movie industry which the theater-owners pay to the
government, but which is passed on to the entire cost of the admission ticket, thus shifting the tax burden
on the buying or the viewing public. It is a tax that is imposed uniformly on all videogram operators.
The levy of the 30% tax is for a public purpose. It was imposed primarily to answer the need for regulating
the video industry, particularly because of the rampant film piracy, the flagrant violation of intellectual
property rights, and the proliferation of pornographic video tapes. And while it was also an objective of
the DECREE to protect the movie industry, the tax remains a valid imposition.

The public purpose of a tax may legally exist even if the motive which impelled the legislature to impose
the tax was to favor one industry over another. 11

It is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been
repeatedly held that "inequities which result from a singling out of one particular class for taxation or
exemption infringe no constitutional limitation". 12 Taxation has been made the implement of the state's
police power.13

At bottom, the rate of tax is a matter better addressed to the taxing legislature.

3. Petitioner argues that there was no legal nor factual basis for the promulgation of the DECREE by the
former President under Amendment No. 6 of the 1973 Constitution providing that "whenever in the
judgment of the President ... , there exists a grave emergency or a threat or imminence thereof, or
whenever the interim Batasang Pambansa or the regular National Assembly fails or is unable to act
adequately on any matter for any reason that in his judgment requires immediate action, he may, in order
to meet the exigency, issue the necessary decrees, orders, or letters of instructions, which shall form part
of the law of the land."

In refutation, the Intervenors and the Solicitor General's Office aver that the 8th "whereas" clause
sufficiently summarizes the justification in that grave emergencies corroding the moral values of the
people and betraying the national economic recovery program necessitated bold emergency measures to
be adopted with dispatch. Whatever the reasons "in the judgment" of the then President, considering
that the issue of the validity of the exercise of legislative power under the said Amendment still pends
resolution in several other cases, we reserve resolution of the question raised at the proper time.

4. Neither can it be successfully argued that the DECREE contains an undue delegation of legislative
power. The grant in Section 11 of the DECREE of authority to the BOARD to "solicit the direct assistance
of other agencies and units of the government and deputize, for a fixed and limited period, the heads or
personnel of such agencies and units to perform enforcement functions for the Board" is not a delegation
of the power to legislate but merely a conferment of authority or discretion as to its execution,
enforcement, and implementation. "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 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." 14 Besides, in the very language of the decree, the authority of the
BOARD to solicit such assistance is for a "fixed and limited period" with the deputized agencies concerned
being "subject to the direction and control of the BOARD." That the grant of such authority might be the
source of graft and corruption would not stigmatize the DECREE as unconstitutional. Should the
eventuality occur, the aggrieved parties will not be without adequate remedy in law.

5. The DECREE is not violative of the ex post facto principle. An ex post facto law is, among other
categories, one which "alters the legal rules of evidence, and authorizes conviction upon less or different
testimony than the law required at the time of the commission of the offense." It is petitioner's position
that Section 15 of the DECREE in providing that:

All videogram establishments in the Philippines are hereby given a period of forty-five (45) days after the
effectivity of this Decree within which to register with and secure a permit from the BOARD to engage in
the videogram business and to register with the BOARD all their inventories of videograms, including
videotapes, discs, cassettes or other technical improvements or variations thereof, before they could be
sold, leased, or otherwise disposed of. Thereafter any videogram found in the possession of any person
engaged in the videogram business without the required proof of registration by the BOARD, shall be
prima facie evidence of violation of the Decree, whether the possession of such videogram be for private
showing and/or public exhibition.

raises immediately a prima facie evidence of violation of the DECREE when the required proof of
registration of any videogram cannot be presented and thus partakes of the nature of an ex post facto law.

The argument is untenable. As this Court held in the recent case of Vallarta vs. Court of Appeals, et al. 15

... it is now well settled that "there is no constitutional objection to the passage of a law providing that
the presumption of innocence may be overcome by a contrary presumption founded upon the experience
of human conduct, and enacting what evidence shall be sufficient to overcome such presumption of
innocence" (People vs. Mingoa 92 Phil. 856 [1953] at 858-59, citing 1 COOLEY, A TREATISE ON THE
CONSTITUTIONAL LIMITATIONS, 639-641). And the "legislature may enact that when certain facts have
been proved that they shall be prima facie evidence of the existence of the guilt of the accused and shift
the burden of proof provided there be a rational connection between the facts proved and the ultimate
facts presumed so that the inference of the one from proof of the others is not unreasonable and arbitrary
because of lack of connection between the two in common experience". 16

Applied to the challenged provision, there is no question that there is a rational connection between the
fact proved, which is non-registration, and the ultimate fact presumed which is violation of the DECREE,
besides the fact that the prima facie presumption of violation of the DECREE attaches only after a forty-
five-day period counted from its effectivity and is, therefore, neither retrospective in character.

6. We do not share petitioner's fears that the video industry is being over-regulated and being eased out
of existence as if it were a nuisance. Being a relatively new industry, the need for its regulation was
apparent. While the underlying objective of the DECREE is to protect the moribund movie industry, there
is no question that public welfare is at bottom of its enactment, considering "the unfair competition posed
by rampant film piracy; the erosion of the moral fiber of the viewing public brought about by the
availability of unclassified and unreviewed video tapes containing pornographic films and films with
brutally violent sequences; and losses in government revenues due to the drop in theatrical attendance,
not to mention the fact that the activities of video establishments are virtually untaxed since mere
payment of Mayor's permit and municipal license fees are required to engage in business. 17

The enactment of the Decree since April 10, 1986 has not brought about the "demise" of the video
industry. On the contrary, video establishments are seen to have proliferated in many places
notwithstanding the 30% tax imposed.

In the last analysis, what petitioner basically questions is the necessity, wisdom and expediency of the
DECREE. These considerations, however, are primarily and exclusively a matter of legislative concern.
Only congressional power or competence, not the wisdom of the action taken, may be the basis for
declaring a statute invalid. This is as it ought to be. The principle of separation of powers has in the
main wisely allocated the respective authority of each department and confined its jurisdiction to such
a sphere. There would then be intrusion not allowable under the Constitution if on a matter left to the
discretion of a coordinate branch, the judiciary would substitute its own. If there be adherence to the
rule of law, as there ought to be, the last offender should be courts of justice, to which rightly litigants
submit their controversy precisely to maintain unimpaired the supremacy of legal norms and
prescriptions. The attack on the validity of the challenged provision likewise insofar as there may be
objections, even if valid and cogent on its wisdom cannot be sustained. 18

In fine, petitioner has not overcome the presumption of validity which attaches to a challenged statute.
We find no clear violation of the Constitution which would justify us in pronouncing Presidential Decree
No. 1987 as unconstitutional and void.

WHEREFORE, the instant Petition is hereby dismissed.

No costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

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

INSULAR LUMBER COMPANY, petitioner,

vs.
COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE, respondents.

G.R. No. L-31137 May 29, 1981

COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs.
COURT OF TAX APPEALS and INSULAR LUMBER COMPANY, respondents.

DE CASTRO, J.:1äwphï1.ñët

These two (2) cases are appeals by way of certiorari from the decision dated July 31, 1969 of the Court of
Tax Appeals ordering the Commissioner of Internal Revenue to refund to the Insular Lumber Company 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.
The undesputed fats of these cases are as follows:

Insular Lumber Company (Company for short). a corporation organized and existing under the laws of
New York. U.S.A., and duly authorized to do business in the Philippines is a licensed forest
concessionaire. The Company purchase manufactured oil and motor fuel which it used in the operation
of its forest cocession, 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. On
December 22, 1964, the Company filed with the Commissioner of Internal Revenue (Commissioner for
short), 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, Republic Act No. 1435. 1 In a
letter dated February 11, 1965, received by the Company on March 31, 1965, 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 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.

Its claim having been denied, the Company filed a petition for review before the respondent court on April
29, 1965. After hearing, the Court of Tax Appeals ruled that the operation of a sawmill is distinct from the
operation of a forest concession, hence, the refund provision of Section 5 of Republic Act No. 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, particularly those paid during the period from January 1, 1963 to
April 29, 1963 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.

In his appeal, the Commissioner assigns the following errors: 1äwphï1.ñët

THE COURT OF TAX APPEALS ERRED IN NOT HOLDING THAT THE FIRST PROVISO IN SECTION 5 OF REPUBLIC
ACT NO. 1435 INVOKED BY INSULAR LUMBER COMPANY AS LEGAL BASIS FOR ITS CLAIM FOR TAX REFUND,
IS NULL AND VOID FOR BEING UNCONSTITUTIONAL

II

THE COURT OF TAX APPEALS ERRED IN NOT HOLDING THAT THE PARTIAL EXEMPTION IN FAVOR OF
MINERS AND FOREST CONCESSIONAIRES UNDER REPUBLIC ACT NO. 1435 IS LIMITED TO ONLY FIVE YEARS
COUNTED FROM JUNE 14,1956, THE DATE OF APPROVAL AND EFFECTIVITY OF THE SAID ACT.

III

THE COURT OF' TAX APPEALS ERRED IN NOT HOLDING THAT INSULAR LUMBER COMPANY USED THE OILS
AND FUELS IN QUESTION AFTER THE EXEMPTION IN FAVOR OF MINERS AND FOREST CONCESSIONAIRES
HAD ALREADY LAPSED OR EXPIRED AND HENCE, NO LONGER IN FORCE.

IV
THE COURT OF TAX APPEALS ERRED IN HOLDING THAT INSULAR LUMBER COMPANY IS ENTITLED TO THE
TAX REFUND OF P10,560.20.

On the other hand, the Company, as appellant, has also assigned the following errors:1äwphï1.ñët

THE RESPONDENT COURT ERRED IN RULING THAT THE PETITIONER IS NOT ENTITLED TO CLAIM A PARTIAL
REFUND OF THE SPECIFIC TAX PAID ON MANUFACTURED OILS USED IN THE OPERATION OF ITS SAWMILL.

II

THE RESPONDENT COURT ERRED IN HOLDING THAT PETITIONER'S CLAIM FOR REFUND OF THE SPECIFIC
TAX PAID ON MANUFACTURED OILS USED DURING THE PERIOD FROM 1 JANUARY 1963 TO 29 APRIL 1963
HAD ALREADY PRESCRIBED.

III

THE RESPONDENT COURT ERRED IN ORDERING THE RESPONDENT COMMISSIONER TO REFUND TO THE
PETITIONER ONLY THE SUM OF P10,560.20; INSTEAD, IT SHOULD HAVE ORDERED THE REFUND OF
P19,921.37 AS CLAIMED BY THE PETITIONER.

Appeal by the Commissioner

In the first assignment of error, the Commissioner contends that the first proviso in Section 5 of Republic
Act No. 1435 is unconstitutional. In claiming the unconstitutionality of the aforesaid section, the
Commissioner anchored its argument on Article VI, Section 21(l) of the 1935 Constitution which
provides:1äwphï1.ñët

No bill which may be enacted into a law shall embrace more than one subject which shall be expressed in
the title of the bill be

The title of R.A. No. 1435 is "An Act to Provide Means for Increasing The Highway Special Fund." The
Commissioner contends that the subject of R.A. No. 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.

We find no merit in the argument. Republic Act No. 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 Id. 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 nor, 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 This does not seem to this Court to have been ignored in the passage of Republic Act No. 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. 3 Furthermore, in deciding the
constitutionality of a statute alleged to be defectively titled, every presumption favors the validity of the
Act. As is true republic 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. 4 In the incident on hand, this Court does not even have any
doubt.

As regards the second and third assignment of errors, the commissioner contends that the five-year
limitation period for partial refund of specific tax paid for oil and fuel used in agriculture and aviation
provided in Section 1 of Republic Act No. 1435 is also applicable to Section 5 of said Act which grants
partial refund of specific tax for oil used by miners or forest concessionaires. Such being the case, the
Commissioner said that the tax exemption already expired on June 14,1961.

The pertinent portion of Section 1 of Republic Act. No. 1435 provides:1äwphï1.ñët

Section 1. Section one hundred and forty-two of the National Internal Revenue Code, as amended, is
further amended to read as follow:1äwphï1.ñët

Section 142: Specific tax on manufactured oils and other fuels. – On refined and manufactured mineral
oils and motor fuels, there shall be collected the following taxes:1äwphï1.ñët

(a) x x x

(b) x x x

(c) x x x

(d) x x x

Whenever any of the oils mentioned above are, during the five years from June eighteen, nineteen
hundred and fifty-two, used in agriculture and aviation, fifty per centrum of the specific tax paid thereon
shall be refunded by the Commissioner of International Ravenue upon submmission of the following:

1. A sworn affidavit of the producer and two disinterested persons proving that the said oils were actually
used in agriculture, or in lieu thereof.

2. Should the producers belong to any producers' association or federation, duly registered with the
Securities and Exchange Commission, the affidavit of the president of tile association or federation,
attesting to the fact that the oils were actually used in agriculture.

Section 5 on the other hand provides:1äwphï1.ñët

Section 5. Provided, however, that whenever any oils mentioned above are used by miners or forest
concessionaires in their operations, twenty-five per centum of the specific tax paid thereon shall be
refunded by the Commissioner of Internal Revenue upon submission of proof of actual use of oils and
under similar conditions enumerated in subparagraph one and two of section one hereof, amending
section one hundred forty-two of the National Internal Revenue Code: ... .

Based on the aforequoted provisions, it is very apparent that the partial refund of specific tax paid for oils
used in agriculture and aviation is limited to five years while there is no time limit for the partial refund of
specific tax paid for oils used by miners and forest concessionaires. We find no basis in applying the
limitation of the operative period provided for oils used in agriculture and aviation to the provision on the
refund to miners and forest concessionaires. It should be noted that Section 5 makes reference to
subparagraphs 1 and 2 of Section 1 only for the purpose of prescribing the procedure for refund. This
express reference cannot be expanded in scope to include the limitation of the period of refund. If the
limitation of the period of refund of specific taxes paid on oils used in aviation and agriculture is intended
to cover similar taxes paid on oil used by miners and forest concessionaires there would have been no
need of dealing with oil used in mining and forest concessions separately and Section 5 should very well
have been included in Section 1 of Republic Act No. 1435, notwithstanding the different rate of exemption.

Appeal by the Company

Anent the first assignment of error, the Company contends that by express provision of its timber license,
it is required to "maintain a modern sawmill or sawmills of sufficient capacity." Clearly, the Company said,
the operation of the sawmill is not merely incidental to the operation of the forest concession but is
indispensable thereto, or forms part thereof. Within the framework of the terms and conditions of the
timber License the cutting of timber and the processing of the felled logs by the sawmill constitute one,
continuous and integrated operation such that one cannot exists independently of the other. The
Company also relies on Section 5 of Republic Act No. 1435 wherein it is provided that "whenever any oils
... are used by miners or forest concessionaires in their operations, they shall be entitled to claim a refund
of 25% of the specific tax paid on said oils." The Company believes that the word operations include all
activities of forest concessionaires which are indispensable to, or required in, the exploitation of their
forest concessions and not limited to purely logging operations.

We agree with respondent court that the operation of sawmill is distinct from the operation of a forest
concessions. By the very nature of their operations, they are entirely two different business ventures.
It is very clear from the language of Section 5 that only miners or forest concessionaries are given the
privilege to claim the partial refund. Sawmill operators are excluded, because they need not be forest
concessionaires nor the latter, always are sawmill operators.

Where the provision of the law is clear and unambiguous. so that there is no occasion for the court's
seeking legislative intent, the law must be taken as it is, devoid of judicial addition or
subtraction. 5 Furthermore, the authorized partial refund under said section partakes of a nature of a tax
exemption and therefore it cannot be allowed unless granted in the most explicit and categorical
language. Well-settled is the rule that exemption from taxation is never presumed. For tax exemption to
be recognized, lie grant Trust be clear and express it cannot be made to rest on vague implications. 6

As regards prescriptive period in claiming refund, it was ruled by respondent court that the Company's
cause of action for a partial refund of the specific tax paid on the oils used during the period from January
1, 1963 to April 29, 1963, had already prescribed. In making such pronouncement, respondent court relied
on the doctrine laid down by tax Court in the case of Commissioner of Internal Revenue vs. Insular Lumber
Company 7 where The same Company herein invoked the same Section 5 of Republic Act No. 1435 to claim
partial refund on specific flax paid on manufactured oils and fuels. This court, in dismissing the Company's
claim for refund on the ground of prescription, said that- in those cases where the tax sought to be
refunded was illegally or erroneously collected, the running of the two year prescriptive period provided
for in Section 306 8 of the National Internal Revenue Code starts from the date the tax was paid. But when
the tax is legally collected as in the present case. the two-year prescriptive period commences to run from
the date of occurrence of the supervening cause which gave rise to the right of refund. The supervening
cause in cases of this nature is the date of use of manufactured of and fuels. Thus, the Court said that
when the supervening cause happened in 1958 but the claim for refund was filed with the Commissioner
op- February 23, 1961 and the petition for review was filed in the Court of Tax Appeals on February 17,
1962, but later dates being more than two years after 1958, the right to claim refund of the tax paid has
prescribed.

We agree with the respondent court. This Court has consistently adhered to the rule that the claim for
refund should first, be filed with the Commissioner of Internal Revenue, and the subsequent appeal to the
Court of Tax Appeals must be instituted, within the said two-year period. If, however, the Commissioner
takes time in deciding the claim, and the period of two years is about to end, the suit of proceeding must
be started in the Court of Tax Appeals before the end of the two year period without awaiting the decision
of the Commissioner. 9 In the present case, it will be dated that although the claim for refund was filed
with the Commissioner on December 22, 1964, the petition for review was filed by the Company only on
April 29, 1965 praying for the refund of specific tax covering several period starting from January 1, 1963.
As found by respondent court, portions of the amount claimed by the Company were used during the
period from January 1, 1963 to April 29, 1963. This Court is bound by said findings, the same being findings
of fact. 10 Following, therefore, the ruling in Commissioner of Internal Revenue vs. Insular Lumber
Company, supra, We hold that the Company is not entitled to the claim for refund for the oils used from
January 1, 1963 to April 29, 1963, on the ground that the right to claim refund of the tax in question paid
during the said periods has prescribed, the petition for review having been filed with the respondent court
only on April 29, 1965, which was beyond the two-year prescriptive period provided for in Section 306 of
the Tax Code.

WHEREFORE, judgment is hereby rendered affirming the decision of the Court of Tax Appeals. No cost

SO ORDERED.

Fernando, C.J., Teehankee, Barredo, Makasiar, Aquino, Concepcion, Jr., Fernandez, Guerrero, Abad Santos
and Melencio-Herrera, JJ., concur.1äwphï1.ñët