G.R. No. L-14787; January 28, 1961
COLGATE-PALMOLIVE PHILIPPINE, INC., petitioner, vs. HON. PEDRO M. GIMENEZ as Auditor General and ISMAEL MATHAY as AUDITOR OF THE CENTRAL BANK OF THE PHILIPPINES, respondents.

FACTS

Petitioner Colgate-Palmolive Philippines, Inc., a manufacturer of toilet preparations, imported materials like irish moss extract, sodium benzoate, and precipitated calcium carbonate for use as stabilizers and flavors in its dental cream. It paid the 17% special excise tax on the foreign exchange used for these importations under Republic Act No. 601 (the Exchange Tax Law). Subsequently, petitioner filed applications for a refund totaling P113,343.99, invoking Section 2 of RA 601, which mandates a refund of the tax for foreign exchange used to import, among other items, “stabilizer and flavors.”
The Central Bank’s Exchange Tax Administration approved a partial refund of P23,958.13 for specific materials. However, the Central Bank Auditor disallowed even this approved amount, ruling that the statutory term “stabilizer and flavors” refers only to those used in the preparation of food or food products, not dental cream. The Auditor General affirmed this disallowance, prompting petitioner to elevate the case to the Supreme Court via petition for review.

ISSUE

Whether the foreign exchange used for importing dental cream stabilizers and flavors is exempt from the 17% special excise tax under Section 2 of Republic Act No. 601, thereby entitling petitioner to a tax refund.

RULING

Yes. The Supreme Court reversed the Auditor General’s decision and ordered the audit and refund of the approved amount. The Court rejected the statutory construction applied by the Auditor General, which sought to restrict “stabilizer and flavors” to food products based on the principle that general terms may be limited by specific accompanying words (ejusdem generis).
The legal logic is that the ejusdem generis rule is inapplicable here because the enumeration in Section 2 of RA 601 is not confined to a single class. While some items preceding “stabilizer and flavors” are food products, the items immediately following it, such as “fertilizer” and “poultry feed,” belong to different classifications (agricultural and industrial). Furthermore, “vitamin concentrate” is more medicinal, and subsequent amendments to the law added “industrial starch,” which is not exclusively for food. Since the statutory list includes disparate items, the term “stabilizer and flavors” cannot be limited by the specific class of food products.
The Court applied the fundamental principle of statutory interpretation: “Ubi lex non distinguit nec nos distinguere debemus” (Where the law does not distinguish, we must not distinguish). The law does not qualify “stabilizer and flavors” by their end-use; therefore, no distinction should be made between those used for food and those used for dental cream. The general terms must be given their general meaning. Consequently, petitioner is entitled to the tax refund for the imported materials used as stabilizers and flavors in manufacturing toothpaste.