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Philippine American Drug Co. v. Collector of Internal Revenue and Court of Tax Appeals EJUSDEM GENERIS

The Supreme Court affirmed the decision of the Court of Tax Appeals that upheld the validity of imposing sales tax on the bank premium paid by Philippine American Drug Co. for importations from 1951 to 1954. The Court ruled that the intent of the law was to base tax on the total landed cost of imported goods, and that the doctrine of ejusdem generis did not require a narrow interpretation that would defeat this purpose. All charges that increase the landed cost, including bank premiums, are considered "similar charges" under the law.

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481 views3 pages

Philippine American Drug Co. v. Collector of Internal Revenue and Court of Tax Appeals EJUSDEM GENERIS

The Supreme Court affirmed the decision of the Court of Tax Appeals that upheld the validity of imposing sales tax on the bank premium paid by Philippine American Drug Co. for importations from 1951 to 1954. The Court ruled that the intent of the law was to base tax on the total landed cost of imported goods, and that the doctrine of ejusdem generis did not require a narrow interpretation that would defeat this purpose. All charges that increase the landed cost, including bank premiums, are considered "similar charges" under the law.

Uploaded by

Ryan Paul Aquino
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Philippine American Drug Co. v.

Collector of Internal Revenue and Court of Tax


Appeals, GR No. L-13032, August 31, 1959 - EJUSDEM GENERIS

DOCTRINE:
● Ejusdem Generis - is a rule of construction adopted as an aid to ascertain and
give effect to the legislative intent when that intent is uncertain or ambiguous, but
the same should not be given such wide application that would operate to defeat
the purpose of the law. In other words, the doctrine is not of universal application.
Its application must yield to the manifest intent of Congress.

FACTS:
● February 14, 1951 to December 31, 1954, petitioner did not for purposes of
computing the advance sales tax on its importations include as part of the landed
cost the difference (P.015) between the amount actually paid by it to the bank en
said importations computed at the rate of P2.015 for every U.S. dollar and the
value of the imported goods computed at the legal rate of P2.00 for every U.S.
dollar.
● On November 4, 1955, respondent demanded from the petitioner the payment of
the sum of P10,243.13 as deficiency advance sales tax.

PROCEDURAL HISTORY:
● The Court of Tax Appeals rendered judgment in said case upholding the validity
of the decision of the Collector of Internal Revenue imposing sales tax on the
bank premium of P0.015 for every U.S. dollar purchased by the petitioner
Philippine American Drug Co. required for its importations from February 14,
1951, to December 31, 1954, which tax, together with the surcharges thereon,
amounted to P10,243.13.
● Hence, this appeal by the taxpayer.

ISSUE:
● Whether or not the bank premium of P0.015 falls under the category of the
charges enumerated in Art. 183-(B) of the Tax Code as included in the taxable
value of imported goods and, therefore, must be declared for tax purposes.

● Appellant cites the change in the wording of the law as an indication of the
intention of Congress to limit the meaning of the phrase "all similar charges."
RULING:
● The Supreme Court DENIED the petition and AFFIRMED the decision of the
Court of Tax Appeals

HELD:
● The inference sought to be drawn by appellant from this change in the law is
unjustified. Whether we interpret the phrase "all similar charges" as component
part of and therefore already included in "the total value thereof", as appellant
seems to accept, or we merely add "all similar charges" as a separate item to
"the import invoice value thereof", as the present law provides, the result will be
the same: the tax is to be based upon the total landed cost of the imported
articles, as pointed out in the Genato case.
● Genato Commercial Corporation vs. The Court of Tax Appeals, et al., 104 Phil.,
615; 55 Off. Gaz. (12), 2092: “With this we disagree for it cannot be denied that
the intention of the law is to include all charges that may be paid by the importer
to bring the importation into the country. In other words, all items of expense that
may be incurred by the importer in bringing the importation into the country and
which would necessarily increase the landed cost must be deemed included in
the phrase “all similar charges" mentioned in the law. The doctrine of ejusdem
generis is but a rule of construction adopted as an aid to ascertain and give
effect to the legislative intent when that intent is uncertain or ambiguous,
but the same should not be given such wide application that would operate
to defeat the purpose of the law. In other words, the doctrine is not of
universal application. Its application must yield to the manifest intent of
Congress.”

NOTES:
● Before Section 183-(B) of the National Internal Revenue Code was first amended
by Republic Act 594 on February 16, 1951, it provided that the tax was imposed
on imported articles "based on the total value thereof at the time they are
received by the importer, including freight, postage, insurance, commission,
customs duty, and all similar charges."
● Republic Act No. 594 amended the section so that the tax on imported articles
shall be "based on the import invoice value thereof, certified to as correct by the
Philippine Consul at the port of origin if there is any, including freight, postage,
insurance, commission, customs duty, and all similar charges."
● "Though we might concede that the term 'total value' in the provision just quoted
could be interpreted to include the premiums that banks charged the importers
for opening letters of credit, we cannot subscribe to the proposition suggested by
the Court of Tax Appeals that the term 'import invoice value', which Republic Act
594 introduced in lieu of the term 'total' value, can be so interpreted. To admit the
correctness of said proposition is to entirely render meaningless the deletion of
the term 'total value' and the insertion in its stead of the term 'import invoice
value' accomplished by Republic Act."

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