STATCON

Doctrine: Strict construction of statutes

Title

GR No. L-8888

SONG KIAT CHOCOLATE

FACTORY V. CENTRAL BANK OF
THE PHILIPPINES

Date: NOVEMBER 29, 1957

ROGELIO M. JALANDONI, appellant

OFFICE OF THE SOLICITOR GENERAL

AMBROSIO PADILLA & SOLICITOR JOSE P.
ALEJANDRO, VICENTE GELLA, NET M.
BALBAO & F.E. EVANGELISTA, CENTRAL
BANK OF THE PHILIPPINES, appellee

Ponente: BENGZON, J.

Nature of the case: A case questioning whether COCOA BEANS may be considered
as CHOCOLATE for the purposes of exemption from the foreign exchange tax imposed by
RA 601 as amended.

FACTS
January 8 October 9, 1953
- plaintiff appellant imported sun dried cocoa beans, paying 17% foreign tax (RA
601 sec 1)
- upon claiming exemption from RA 601 section 2, it sued Central Bank of the
Philippines (CBP) and the treasurer of the Philippines
- defendants submitted on time a motion to dismiss the case on the grounds of:
a. the complaint stated no cause of action because cocoa beans were not
chocolate
b. it was a suit against the govt., without the latters consent
November 19, 1953
- HON. NARVASA SUSTAINED THE MOTION AND DISMISSED THE CASE
May 1954
Appellant appealed and contended that the LOWER COURT ERRED IN DISMISSING
THE CASE and in holding that THE TERM CHOCOLATE DOES NOT INCLUDE SUN
DRIED COCOA BEANS
Appellant quoted from the dictionaries and encyclopedias. Yet, the quotations
refer to cocoa as chocolate nut, chocolate bean or chocolate tree. And
LEGAL EXEMPTION REFERS TO CHOCOLATE not the bean, nut or tree.
August 1954
- Congress approved RA 1197 amending section 2 by SUBSTITUTING COCOA
BEANS FOR CHOCOLATE
Appellees contended that there has been a change of legislative policy, not a
declaration or qualification of the previous Congressional purpose

ISSUE/S
WON the cocoa benas are considered as chocolates in order that the
appellants be exempted from the foreign exchange tax imposed by the
RA 601(amended), having in mind the principle of strict construction of

statutes exempting from taxation? - NO

RATIO
Keeping in mind the principle of strict construction of statutes exempting
from taxating, the exemption for chocolate in the section 2 of RA
601 as amended, does not include cocoa beans. chocolate is a
manufactured consumer product, while cocoa beans is a raw material.
The Congress has already approved RA 1197, amending section 2 substituting cocoa beans for chocolate. There is a new policy of the
government in exempting, for the first time, of cocoa beans, which is the
Presidents Proclamation No. 62. It was promulgated in September 2,
1954, issued in accordance with RA 1197 specifying that said exemption
of cocoa beans shall operate from and after September 3, 1054,
not before.
As a rule, statues operate prospectively.
WHEREFORE the ORDER OF DISMISSAL IS AFFIRMED, with COSTS
AGAINST APPELLANT.
Notes
REPUBLIC ACT NO. 601 - AN ACT TO IMPOSE A SPECIAL EXCISE TAX ON FOREIGN
EXCHANGE SOLD BY THE CENTRAL BANK OF THE PHILIPPINES AND ITS AGENTS
Section 1 - Except as herein otherwise provided, there shall be assessed, collected and
paid a special excise tax of seventeen per centum (17%) on the value in Philippine peso of
foreign exchange sold and/or authorized to be sold by the Central Bank of the Philippines
or any of its agents during the period of two years counted from the date of the approval of
this Act.
Section 2 - The tax collected under the preceding section on foreign exchange used for
the payment of the cost, transportation and/or other charges incident to importation into
the Philippines of rice, flour, canned milk, cattle and beef, canned fish, soya beans,
butterfat, chocolate, malt syrup, tapioca, stabilizer and flavors, vitamin concentrate,
fertilizer, poultry feed; textbooks, reference books, and supplementary readers approved
by the Board on Textbooks and/or established public or private educational institutions;
newsprint imported by or for publishers for use in the publication of books, pamphlets,
magazines and newspapers; book paper, book cloth, chip board imported for the printing of
supplementary readers (approved by the Board on Textbooks) to be supplied to the
Government under contracts perfected before the approval of this Act, the quantity thereof
to be certified by the Director of Printing; anesthetics, anti-biotics, vitamins, hormones, XRay films, laboratory reagents, biologicals, dental supplies, and pharmaceutical drugs
necessary for compounding medicines; medical and hospital supplies listed in the appendix
to this Act, in quantities to be certified by the Director of Hospitals as actually needed by
the hospitals applying therefor; drugs and medicines listed in the said appendix; and such
other drugs and medicines as may be certified by the Secretary of Health from time to time
to promote and protect the health of the people of the Philippines shall be refunded to any
importer making application therefor, upon satisfactory proof of actual importation under
the rules and regulations to be promulgated pursuant to section seven hereof.
REPUBLIC ACT NO. 1197 - AN ACT TO FURTHER AMEND REPUBLIC ACT NUMBERED SIX
HUNDRED ONE, AS AMENDED BY REPUBLIC ACT NUMBERED ELEVEN HUNDRED SEVENTYFIVE
Section 2 - The new exemptions provided for in this amendatory Act shall take effect
only on the dates which the President of the Philippines shall fix when this judgment the
interest of the national economy and general welfare so require.
Link of RA 601:

http://www.chanrobles.com/republicacts/republicactno601.html#.VdUgilOqqko
Link of RA 1197:
http://www.chanrobles.com/republicacts/republicactno1197.html#.VdUgYlOqqko
Link of full text: http://www.lawphil.net/judjuris/juri1957/nov1957/gr_l-8888_1957.html

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