SSMS of Tre Prilit’Is Court of Tax Appeats Gmith, et al. vs. Commisgioner of Internal Arvenur Za as re ° SS Ere PRG

DECISION

Thie is an appeal from the decision of re- spondent dated Octoder 11, 1965, which imposed a defied tax of ©11,713.99 om 119 caves of “Chauteoe Cay” wine imported by peti- tioner from August 1963 te Auguet 1965. The eeeo hes been submitted by the parties to this Court for resolution on the basis of the plead- ings on record, Petitioner, a duly registered domestic corporation with office at fm. 13, South Super Highway, "arafiaque, Rizal, is engaged, among others, in the iaportetion of wines. From August 1963 te August 1965, it imported 119 cases of "Chauteau Gey” wine which it declared as gtij) wing ond paid thereon a specific tax at the rate of #1,00 per liter of volume capacity under See- tion 13%(b) of the Tax Code (p. 6, BIA ree.).

DECISION »

CTA CASH WO, 1733 2 For the purpese ef determining the correct aexount of specific tax due on the imported wine, the seme was tested and analysed by the Bureau of Internal “evenue Laboratory Senter. The anelyst whe conducted the laboratory test reported and declare4 that "Chateau Gay" ts e delicate light table wine, with aleohol centent of 9.5% hy volume (volume 745 ce © 29°C), eharseteriszed with explosion upon opening and effervescence due CG, (reviduel). It showld, therefore, be classified ae sperkiing wing (p. 12, BIR ree.), According- ly, respondent esseseset petitioner for deficieney apecific tax on Cctober 11, 1965 (Annex A), reletive to the 119 cases of imported “Chateau Gay" wine, eslling for the payment of ©11,713.90 computed as follows:

. bs et 14O.e : t ei rH t J | : ' § ay, ee Ce car “ wee : te . od 107.200; “ + " 5 906829 Ve * « ? “ ® S = ry oO + bes ¢ go | * wipro * | «yukon gt os 3 etcile, Deficiency specifie tex on Chateau Gay . pak Pvakhs Petitioner dees not dispute the emount of deficiency specific tax computed by respondent.

DECISION «

CTA CASE 80, 1733 3 He only assaile the welidity ead legality of the seid assesament based on Seetion 1}#(a) of the Tax Code, dnira, because the determination made by respondent of what constitute sparkling wine is an undue delegation of legislative power..

The only issue, therefore, ia whether or not Section 13+(a) of the Netional Internal Revenue Code, upon which the deficiency tex aseesenent under review is besed, is constitution- al. The pertinent provisions of the Tax Code involved herein reed as fellows:

SEC, 4 Teen On wines janie a,ien 2 shall be collected, per liter of volume capacity, the re follewing taxes:

ta) Bgorhding winer, regardless lve pesos.

(b) —, winse uaef slecnel or 1 = 1 or my Arg Apr one peso, Petitioner assails and challenges the constitutionality of Section 13%(a) of the Tax Code and contends that the provisions thereof do not provide or give respondent « sufficient guide or standard in determining what “sparkling wine" as. Petitioner contends that the determination wade by respondent of what constitute gpuarkling wine is an undue exercise of legislative power 379

OECIEIGN

CTA CASE BO, 1733 ly whieh, by constitutioral mandate, is exclusively vested in Congress, In @efenge of the lecality of the tax asrese- sent, respondent contends that the action taken by his office in determining under Section 134%(a) of the Tex Code what constitute epsrkling wine is merely an sxerpign of delorated sfnioistra= tive powrr to carry out the purpose and intent of the low (Sec. 13%Za7 of the Tax Code}, and is ea of legislative power.

The determination by responfent that “Chatean Gay” is a spuarkling wine, besed on chemical snulysis by the BIP laboratory “orter of ita aleonolti« contents and charocteriatias, doen not constitute an exercize of legislative power. The Leboratory examination of the wine is a sere aduinietrative ascerteiomest of the facta and conditions under wateh Seetion 13+(e) of the Revenue Code will be enfores4, The general rule consistentiy followed by courts in to @istinguish between the delegation of power to aake the law and eonferring authority or diseretion az to its execution. It tas been saidse “The true distinetion is between the Gelegation of power to sake the law, whieh necen~ sarily involves a @iseretion as to what it shell be, and conferring authority or diseretion as to 380

DECISION =

CTA CASE No, 1733 5 , its execution, to be exercised under and in pursuance of the law. The first cannot be done; te the latter no valid objection can be sede.” 4 (Cineinnati, We & Ze Re Cos ve Clinton County Comrse, 1 Ohie St. 88.)

In line with the doctrine quoted above, our Supreme Court held that « law empowering en ad- ministrative board, among other things, to clas- sify and grade Pailiprine fibers, and determine the official standards for the various fibers for export, “is nothing sore than « delegation of edministrative power in the Fiber board to carry out the purpose and intent of the lew, and not « Gelegation of legislative power.” (Alegre Ve Insular Collector of Customs, 5} "nile, 39%.) Delegation of authority to boards of special in- quiry in immigration cases is valid (Lorenzo v. NeCoy, 15 Phil. 559). Cikewise, where the lew (Commonwealth Act So. 454) empowers the Public Service Coumission to determine the conditions and facts under which certificates of publie con- venience or certificates of public necessity and convenience shall be issued, the grant of sdminits- trative power is not » violation of the constitu- tional prohibition. It was ruled thet “all that has been delegated to the commission x x x

DXCTSION -

CTA CASE 90. 1733 is the administrative function involving the use of diseretion, to carry out tne will of the Sational Assembly having in view, in addition, the prometion of public interests in a proper and suitable manner." (Pangasinen Trensportation Co., Inc. v. The Public "ervice Commission, 70 Phil. 221.) Similarly, where the law (Commonvealth Act No. Se!) empowers the Director of Public Works

and the Secretary of Public Works and Coununicea-

tions to prommleste rules and reculetions ta regulate end control the treffie and wse of rosds and streets designated as pationsl soads, the disputed lew has beer held as constitutionally valtéd in thet “the delexated power, if st al), therefore, ig not the determinstion of what the law shall be, but werely the ascertainment of the facts and ciroumstances upon which the application of said law is to be nredicated. x x x an administrative function which eannet be directly @ischargeé by the “ational Ausembly." (Calalang

v. Williams, 70 Phil., 726.)

In the ease of Pangasinan Transpertetion ©o,, TInt, v. The Public Sarvies Comission, supra, our Supreme Court recognized the validity of delegating legislative powers when it held as follows:

DRCISION -

CTA CASE MO. 1733 9 One thing, however aw. in the development of the ortne neiple of seperation of Ha Bo and thet 4s that the maxim of 9 attr af et Consuetedinious Beg wi ted by G, ©. Woodbine, Yale Uni- versity “ress, "4922, vol. 2 Fe 167) but eh is also an Pee | principle in the Roman law (D. 17. 18.3), has been made to adapt itself to the lexities of modern govern- ments, giving rise to the edeptiocn, within certain limits, of the ine ef of ‘subordinate legislation,' not only in the United Stetes and England but in peactsgel ty all modern governments. (feople yg. Resenthal ond Comefie, GH. Sos, 46076 and 46077, promgulgsted June 12, 1359.7 According Ys 2 a = a

COMP LOX:

Tisctioy a? the subjects oF over mental reguiation, and thi sorpaned Giri seiay oF telat

Ros

f SenGy Toy ard the delesatl 2k a x pove: by the Tepislatu ard the approve, Lo rac.

a ni @n rainage of Millen +4 BS, E. 27, ¥s, 143 5. Ct. 190; State y. Knox County o We a 165 Tenne 319.) ‘In hare maa ines ya. Seard of ae Utility stioners Pril.e, 136), relied upon by the petitioner, ‘hes, In ine e te seal of = proval “te th the ‘ielegation of ter powers by the legislature Inchaus- Steamship Co. o: Ft" jfeblte aeés ‘Aines Commissioner, ‘+ atin ine; Pe Peopis Mae. be ate vuaeae We aq R, wigeted Je June 15, 1938 a ees Rosenthal & Osmefia, G. Re. Nos. 46076, 46077, promuleated June 12, 1939; end Robb and Silscher vs. foenie G. RK. No. 49866, promulgated June 15, 1929.) (Under lining supplied) The enelytical findings of the BIR Labora- tory Center thet “Chateau Gey" has 9.5% aleonol by volume, with explosion upon opening and effervescence due to 00. (residuel) showld be Classified as “gperkling wine”. The said find- ings and conclusion of respondent ie supported by Heretein and Jacobs, who in their book en- titled “Chemistry 4 fechnelogy of Wines and Liquors,” wrote as follows:

wo daaafaea sea ooane tled before t ation has Ceased so that they contein csrben dioxide gas in solution eat greater than atmospheric sure. When pg Rte served, the carbon dioxide is liberated with effervescence, This and alecholic contents vary ogy of Wines and 9 0 9 by ‘er when respondent found that "Chautean Oey" ts @ sperkling wine subjeet to the specific tax provided in Sec. 134(a) of the Nevenue Code, the said officiel merely exercised « diseretion con- ferred by law without, in any wey, determining what the lew should be. Wenge, 20 undue delega- » 384 1.

In the result 385