MISAMIS ORIENTAL ASSOCIATION OF COCO TRADERS, INC., vs. DEPARTMENT OF FINANCE SECRETARY, COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE (BIR), AND REVENUE DISTRICT OFFICER, BIR MISAMIS ORIENTAL.
- G.R. Number: G.R. No. 108524
- Promulgated: 1994-11-10
- Ponente: Mendoza, J.
Doctrine
Tax exemptions must be strictly construed against the taxpayer and liberally in favor of the State; administrative interpretations of tax provisions are accorded deference.
In reviewing an administrative (legislative) rule, courts inquire whether it is within delegated authority, reasonable, and issued pursuant to proper procedure; for interpretative rules, the inquiry is into correctness or propriety.
The Commissioner of Internal Revenue is not bound by rulings of his predecessors; overruling prior interpretations may be part of statutory interpretation.
Facts
Petitioner sought prohibition and injunction to nullify Revenue Memorandum Circular No. 47-91 and to enjoin respondent revenue officials from collecting VAT on copra sales by petitioner members.
Petitioner is a domestic corporation whose members buy and sell copra in Misamis Oriental and contended that copra was an agricultural food product under �103(b) and thus VAT-exempt.
On 11 June 1991 the Commissioner issued RMC No. 47-91 (implementing VAT Ruling 190-90) classifying copra as an agricultural non-food product, exempt from VAT only when sold by the primary producer under �103(a).
Issues
Whether copra is an "agricultural food product" under �103(b) of the NIRC and thus exempt from VAT.
Whether RMC No. 47-91 is discriminatory and violates equal protection by exempting coconut farmers and copra producers but not traders and dealers.
Ruling
The petition is dismissed; the Court upheld the Commissioner's classification of copra as not an "agricultural food product" within �103(b) and sustained RMC No. 47-91.
The Court found no reason to hold the Commissioner erred and rejected petitioner's equal protection claim as insufficient to overturn the administrative interpretation.
Keywords
G.R. No. 108524, Revenue Memorandum Circular No. 47-91, Value Added Tax (VAT), copra, agricultural food product, agricultural non-food product, Section 103(b) of the National Internal Revenue Code, Section 103(a) of the National Internal Revenue Code, VAT Ruling 190-90, tax exemptions, strict construction against the taxpayer, liberal construction in favor of the state, Commissioner of Internal Revenue, Bureau of Food and Drug, Section 245 of the NIRC, due process, legislative rules, interpretative rules, Administrative Code of 1987, subordinate legislation