G.R. No. L-28693 September 30, 1974
VI VE CHEMICAL PRODUCTS, INC., petitioner, vs. COMMISSIONER OF CUSTOMS and THE COLLECTOR OF THE PORT OF MANILA, PEDRO PACIS, respondents.

FACTS

Petitioner Vi Ve Chemical Products, Inc. imported 250 drums of glutamic acid from Taiwan on March 22, 1966. The Collector of Customs assessed and collected customs duty amounting to P27,274.00 based on Executive Order No. 225, which amended the Tariff and Customs Code. The EO imposed an alternate duty on glutamic acid of either a specific duty of P2.40 per kilo or an ad valorem duty of 40%, whichever was higher. The specific duty was applied as it yielded a higher amount. Petitioner protested, contending it should only pay P3,519.00 based on the previous duty rate of 10% ad valorem. The Collector and the Commissioner of Customs denied the protest, leading to an appeal to the Court of Tax Appeals.
The CTA sustained the Commissioner. Petitioner then elevated the case to the Supreme Court, arguing that Executive Order No. 225 was invalid for non-compliance with Section 401 of the Tariff and Customs Code. Petitioner asserted there was no prior Tariff Commission investigation and National Economic Council recommendation, no showing of necessity for the increase for national economy or welfare, and that the increase exceeded the statutory limit of five times the former rate.

ISSUE

Whether Executive Order No. 225, which increased the tariff duty on imported glutamic acid, was validly issued by the President pursuant to the delegated legislative power under the Tariff and Customs Code.

RULING

The Supreme Court affirmed the CTA decision and upheld the validity of Executive Order No. 225. On the first ground, the Court, adopting the CTA’s findings, held that a public hearing was in fact conducted by the Tariff Commission, which subsequently recommended the duty increase, and the National Economic Council favorably endorsed it. The procedural requirements under the law were thus satisfied.
On the second ground, the Court agreed with the CTA that the increase was necessary in the interest of national economy and general welfare. The protection of local industries manufacturing glutamic acid constituted a valid objective under the Tariff Code, justifying the imposition of higher tariff duties.
On the third ground, the Court found that the increase did not exceed the five-time limit prescribed by Section 401 of the Code. The Tariff Commission’s computation, based on the value of glutamic acid imported from Taiwan in 1963—the most recent representative period for which data was available—correctly showed the maximum allowable duty was P2.42 per kilo. The specific duty imposed by the EO was P2.40 per kilo, which was within this limit. Petitioner’s computation using the 1966 import value was erroneous, as the relevant period for determination is prior to the issuance of the executive order. The President’s exercise of the delegated tariff-fixing power was in strict conformity with the statutory conditions.