Insular Lumber vs CTA

Insular Lumber Company v. CTA GR No. L-31057 May 29, 1981

Sec. 26 Art. 6 of the Constitution: paragraph (1) Every bill passed by the Congress shall embrace only one subject which shall be expressed in the title thereof. FACTS: Insular Lumber Company a corporation organized and existing under the laws of New York, USA and duly authorized to do business in the Philippines as a licensed forest concessionaire. It purchased oil and motor fuel which it used in the operation of its forest concession. It paid specific taxes for the purchase of such oil and motor fuel. In 1956, Republic Act 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. In 1964, Insular Lumber Company filed a claim for tax refund of P19,921.37 but The Court of Tax Appeal ruled that Insular Lumber Company is not covered by such provision because Sec. 5, RA 1435 is only effective 5 years from its enactment. Hence, in 1961 the provision ceased to be effective. Insular Lumber Company appealed the decision of the Court of tax Appeal but it ruled that the refund provision only applies to forest and mining concessionaries and cannot be extended to operators of sawmill. The Court ruled that a partial tax refund of only P10,560.00 will be refunded . ISSUE: 1. Whether or not Section 5, of Republic Act 1435 is unconstitutional for violating Sec. 26 Art 6 of the Constitution. HELD: 1. No, The Court held that Section 5 of RA 1435 is constitutional there being only one subject in the bill, which is to increase Highway Special Fund through an increased specific tax on manufactured oil. The provision on section 5 of the bill was merely to provide for partial exemption from the imposed increased tax. 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. The Court also claimed that in deciding the constitutionality of a statute, every presumption favors the validity of the statute.