Wednesday, May 29, 2013

Song Kiat Chocolate Factory v. Central Bank of the Philippines


Full Text: http://www.lawphil.net/judjuris/juri1957/nov1957/gr_l-8888_1957.html

Facts:
During the period from January 8, 1953 to October 9, 1953, the plaintiff appellant imported sun dried cocoa beans for which it paid the foreign exchange tax of 17 per cent totaling P74,671.04. Claiming exemption from said tax under section 2 of same Act, it sued the Central Bank that had exacted payment; and in its amended complaint it included the Treasurer of the Philippines. CFI Manila dismissed the case on the ground that the term "chocolate" does not include sun-dried cocoa beans.

Issue:
Whether or not cocoa beans may be considered as "chocolate" for the purposes of exemption from the foreign exchange tax imposed by Republic Act No. 601 as amended.

Held:
No, exemption from Section 2 of chocolate does not include cocoa beans. Having in mind the principle of strict construction of statutes exempting from taxation,3 we are of the opinion and so hold, that the exemption for "chocolate" in the above section 2 does not include "cocoa beans". The one is raw material, the other manufactured consumer product; the latter is ready for human consumption; the former is not.
On the other hand, the congress approved Republic Act 1197 amending section 2 by substituting "cocoa beans" for "chocolate.". However, since statutes operate prospectively, the amendments cannot be applied in the case at bar. The appellant's cocoa beans had been imported during January - October 1953, i.e. before the exemption decree which is after September 3, 1954 pursuant to Proclamation No. 62,.

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