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FIRSTDIVISION

[G.R.No.119252.August18,1997]

COMMISIONER OF INTERNAL REVENUE and COMMISIONER OF CUSTOMS,


petitioners,vs.HON.APOLINARIOB.SANTOS,inhiscapacityasPresiding
Judge of the Regional Trial Court, Branch 67, Pasig City ANTONIO M.
MARCO JEWELRY BY MARCO & CO., INC., and GUILD OF PHILIPPINE
JEWELLERS,INC.,respondents.
DECISION
HERMOSISIMA,JR.,J.:

Of grave concern to this Court is the judicial pronouncement of the court a quo that certain
provisionsoftheTariff&CustomsCodeandtheNationalInternalRevenueCodeareunconstitutional.
This provokes the issue:Can the Regional Trial Courts declare a law inoperative and without force
andeffectorotherwiseunconstitutional?Ifitcan,underwhatcircumstances?
Inthispetition,theCommissionerofInternalRevenueandtheCommissionerofCustomsjointly
seek the reversal of the Decision,[1] dated February 16, 1995, of herein public respondent, Hon.
ApolinarioB.Santos,PresidingJudgeofBranch67oftheRegionalTrialCourtofPasigCity.
Thefollowingfacts,conciselyrelatedinthepetition[2]oftheOfficeoftheSolicitorGeneral,appear
tobeundisputed:
"1.PrivaterespondentGuildofPhilippineJewelers,Inc.,isanassociationofFilipinojewelersengagedinthe
manufactureofjewelers(sic)andalliedundertakings.AmongitsmembersareHansBrumann,Inc.,Miladay
JewelsInc.,Mercelles,Inc.,SolidGoldInternationalTradersinc.,DiagemTradingCorporation,andPrivate
respondentJewelrybyMarco&Co.,Inc.PrivaterespondentAntonioM.MarcoisthePresidentoftheGuild.
2.OnAugust5,1988,FelicidadL.Viray,thenRegionalDirector,RegionNo.4AoftheBureauofInternal
Revenue,actingforandinbehalfoftheCommissionerofInternalRevenue,issuedRegionalMissionOrderNo.
10988toBIRofficers,ledbyEliseoCorcega,toconductsurveillance,monitoring,andinventoryofall
importedarticlesofHansBrumann,Inc.,andplacethesameunderpreventiveembargo.Thedurationofthe
missionwasfromAugust8toAugust20,1988(Exhibit1ExhibitA).
3.OnAugust17,1988,persuanttotheaforementionedMissionOrder,theBIRofficersproceededtothe
establishmentofHansBrumann,Inc.,servedtheMissionOrder,andinformedtheestablishmentthattheywere
goingtomakeaninventoryofthearticlesinvolvedtoseeifthepropertaxesthereonhavebeenpaid.Theythen
madeaninventoryofthearticlesdisplayedinthecabinetswiththeassistanceofanemployeeofthe
establishment.Theylisteddownthearticles,whichlistwassignedbytheassistantemployee.Theyalso
requestedthepresentationofproofofnecessarypaymentsforexcisetaxandvalueaddedtaxonsaidarticles
(pp,1015,TSNApril12,1993,Exhibits2,2A,3,3a).
4.TheBIRofficersrequestedtheestablishmentnottosellthearticlesuntilitcanbeproventhatthenecessary
taxesthereonhavebeenpaid.Accordingly,Mr.HansBrumann,theowneroftheestablishment,signedareceipt
forGoods,Articles,andThingsSeizedunderAuthorityoftheNationalInternalRevenueCode(datedAugust
17,1988),acknowledgingthatthearticlesinventoriedhavebeenseizedandleftinhispossession,andpromising
nottodisposeofthesamewithoutauthorityoftheCommissionerofInternalRevenuependinginvestigation.[3]
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5.Subsequently,BIRofficerEliseoCorcegasubmittedtohissuperiorsareportoftheinventoryconductedanda
computationofthevalueaddedtaxandadvaloremtaxonthearticlesforevaluationanddisposition.[4]
6.Mr.HansBrumann,theowneroftheestablishment,neverfiledaprotestwiththeBIRonthepreventive
embargoofthearticles.[5]
7.OnOctober17,1988,LetterofAuthorityNo.0020596wasissuedbyDeputyCommissionerEufracioD.
SantostoBIRofficerstoexaminethebooksofaccountsandotheraccountingrecordsofHansBrumann,Inc.,
forstocktakinginvestigationforexcisetaxpurposesfortheperiodJanuary1,1988topresent(ExhibitC).Ina
latterdatedOctober27,1988,inconnectionwiththephysicalcountoftheinventory(stocksonhand)pursuant
tosaidLetterofAuthority,HansBrumann,Inc.wasrequestedtoprepareandmakeavailabletotheBIRthe
documentsindicatedtherein(Exhibit'D').
8.HansBrumann,inc.,didnotproducethedocumentsrequestedbytheBIR.[6]
9.SimilarLettersofAuthoritywereissuedtoBIRofficerstoexaminethebooksofaccountsansother
accountingrecordsofMiladayJewels,Inc.,Mercelles,Inc.,SolidGoldInternationalTraders,Inc.,(ExhibitE,G
andN)andDiagemTradingCorporation[7]forstocktaking/investigationforexcisetaxpirposefortheperiod
January1,1988topresent.
10.InthecaseofMiladayJewels,Inc.andMercelles,Inc.,thereisnoaccountofwhatactuallytranspiredinthe
implementationoftheLettersofAuthority.
11.InthecaseofSolidGoldInternationalTradersCorporation,theBIRofficersmadeaninventoryofthe
articlesintheestablishment.[8]ThesameistruewithrespecttoDiagemTradersCorporation.[9]
12.OnNovember29,1988,privaterespondentsAntonioM.MarcoandJewelryByMarco&Co.,Inc.filedwith
theRegionalTrialCourt,NationalCapitalJudicialRegion,PasigCity,MetoManila,apetitionfordeclaratory
reliefwithwritofpreliminaryinjunctionand/ortemporaryrestrainingorderagainsthereinpetitionersand
RevenueRegionalDirectorFelicidadL.Viray(docketedasCivilCaseNo.56736)prayingthatSections126,
127(a)and(b)and150(a)oftheNationalInternalRevenueCodeandHdg.No71.01,71.02,71.03and71.04,
Chapter71oftheTariffandCustomsCodeofthePhilippinesbedeclaredunconstitutionalandvoid,andthatthe
CommissionerofInternalRevenueandCustomsbepreventedorenjoinedfromissuingmissionordersandother
ordersofsimilarnature.xxx
13.OnFebruary9,1989,hereinpetitionersfiledtheiranswertothepetition.xxx
14.OnOctober16,1989,privaterespondentsfiledaMotionwithLeavetoAmendPetitionbyincludingas
petitionertheGuildofPhilippineJewelers,Inc.,whichmotionwasgranted.xxx
15.Thecase,whichwasoriginallyassignedtoBranch154,waslaterreassignedtoBranch67.
16.OnFebruary16,1995,publicrespondentrenderedadecision,thedispositiveportionofwhichreads:
'Inviewoftheforegoingreflections,judgmentisherebyrendered,asfollows:
1.DeclaringSection104oftheTariffandtheCustomCodeofthePhilippines,Hdg,71.01,71.02,71.03,and
71.04,Chapter71asamendedbyExecutiveOrderNo.470,imposingthreetoten(3%to10%)percenttariffand
customsdutyonnaturalandculturedpearlsandpreciousorsemipreciousstones,andSection150par.(a)the
NationalInternalRevenueCodeof1977,asamended,renumberedandrearrangedbyExecutiveOrder273,
imposingtwenty(20%)percentexcisetaxonjewelry,pearlsandotherpreciousstones,asINOPERATIVEand
WITHOUTFORCEandEFFECTinsofaraspetitionersareconcerned.
2.Enforcementofthesameisherebyenjoined.
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Nocost.
SOORDERED.
Section150(a)ofExecutiveOrderNo.273reads:
SEC.150.Nonessentialgoods.Thereshallbelevied,assessedandcollectedataxequivalentto20%basedon
thewholesalepriceorthevalueofimportationusedbytheBureauofCustomsindeterminingtariffandcustoms
dutiesnetoftheexcisetaxandvalueaddedtax,ofthefollowinggoods:
(a)Allgoodscommonlyorcommerciallyknownasjewelry,whetherrealorimitation,pearls,preciousand
semipreciousstonesandimitationsthereofgoodsmadeof,orornamented,mountedandfittedwith,precious
metalsorimitationsthereoforivory(notincludingsurgicalanddentalinstruments,silverplatedwares,frames
ormountingsforspectaclesoreyeglasses,anddentalgoldorgoldalloysandotherpreciousmetalsusedin
filling,mountingorfittingoftheteeth)operaglassesandlorgnettes.Thetermpreciousmetalsshallinclude
platinum,gold,silver,andothermetalsofsimilarorgreatervalue.Thetermimitationthereofshallinclude
platingsandalloysofsuchmetals.
Section150(a)ofExecutiveOrderNo.273,whichtookeffectonJanuary1,1988,amendedthe
thenSection163(a)oftheTaxCodeof1986whichprovidedthat:
SEC.163.Percentagetaxonsalesofnonessentialarticles.Thereshallbelevied,assessedandcollected,once
onlyoneveryoriginalsale,barter,exchangeorsimilartransactionfornominalorvaluableconsideration
intendedtotransferownershipof,ortitleto,thearticlehereinbelowenumeratedataxequivalentto50%ofthe
grossvalueinmoneyofthearticlessosold,bartered.Exchangedortransferred,suchtaxtobepaidbythe
manufacturerorproducer:
(a)Allarticlescommonlyorcommerciallyknownasjewelry,whetherrealorimitation,pearls,preciousand
semipreciousstones,andimitationsthereof,articlesmadeof,orornamented,mountedorfittedwith,precious
metalsorimitationsthereoforivory(notincludingsurgicalanddentalinstruments,silverplatedwares,frames
ormountingforspectaclesoreyeglasses,anddentalgoldorgoldalloysandotherpreciousmetalusedinfilling,
mountingorfittingoftheteeth)operaglasses,andlorgnettes.Thetermpreciousmetalsshallincludeplatinum,
gold,silver,andothermetalsofsimilarorgreatervalue.Thetermimitationsthereofshallincludeplatingsand
alloysofsuchmetals
Section 163(a) of the 1986 Tax Code was formerly Section 194(a) of the 1977 Tax Code and
Section 184(a) of the Tax code, as amended by Presidential Decree No. 69, which took effect on
January1,1974.
Itwillbenotedthat,whileunderthepresentlaw,jewelryissubjecttoa20%excisetaxinaddition
to a 10% valueadded tax under the old law, it was subjected to 50% percentage tax. It was even
subjectedtoa70%percentagetaxunderthenSection184(a)oftheTaxCode,asamendedbyP.D.
69.
Section 104, Hdg, Nos. 17.01, 17.02, 17.03 and 17.04, Chapter 71 of the Tariff and Customs
Code,asamendedbyExecutiveOrderNo.470,datedJuly20,1991,imposesimportdutyonnatural
or cultured pearls and precious or semiprecious stones at the rate of 3% to 10% to be applied in
stagesfrom1991to1994and30%in1995.
Prior to the issuance of E.O. 470, the rate of import duty in 1988 was 10% to 50% when the
petitionwasfiledinthecourtaquo.
In support of their petition before the lower court, the private respondents submitted a position
paper purporting to be an exhaustive study of the tax rates on jewelry prevailing in other Asian
countries,incomparisontotaxratesleviedonthesameinthePhilippines.[10]
Thefollowingissueswerethusraisedtherein:
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"1.WhetherornottheHonorableCourthasjurisdictionoverthesubjectmatterofthepetition.
2.Whetherthepetitionstatesacuaseofactionorwhetherthepetitionallegesajusticiablecontroversybetween
theparties.
3.WhetherSection150,par.(a)oftheNIRCandSection104,Hdg.71.01,71.02,71.03and71.04oftheTariff
andCustomsCodeareunconstitutional.
4.WhethertheissuanceoftheMissionOrderandLettersofAuthorityisvalidandlegal.
In the assailed decision, the public respondent held indeed that the Regional Trial Court has
jurisdictiontotakecognizanceofthepetitionsincejurisdictionoverthenatureofthesuitisconferred
bylawanditisdetemine[d]throughtheallegationsinthepetition,andthattheCourtofTaxAppeals
ha no jurisdiction to declare a statute unconstitutional much less issue writs of certiorari and
prohibitioninordertocorrectactsofrespondentsallegedlycommittedwithgraveabuseofdiscretion
amountingtolackofjurisdiction.
As to the second issue, the public respondent, made the holding that there exist a justiciable
controversybetweentheparties,agreeingwiththestatementsmadeinthepositionpaperpresented
bytheprivaterespondents,andconsideringthesestatementstobefactualevidence,towit:
Evidenceforthepetitionersindeedrevealsthatgovernmenttaxationpolicytreatsjewelry,pearls,andother
preciousstonesandmetalsasnonessentialluxuryitemsandtherefore,taxedheavilythattheatmosphericcost
oftaxationiskillingthelocalmanufacturingjewelryindustrybecausetheycannotcompetewiththeneighboring
andothercountrieswhereimportationandmanufacturingofjewelryisnottaxedheavily,ifnotatallthatwhile
governmentincentivesandsubsidiesexist,localmanufacturerscannotavailofthesamebecauseofficiallymany
ofthemareunregisteredandareunabletoproducetherequiredofficialdocumentsbecausetheyoperate
underground,outsidethetariffandtaxstructurethatlocaljewelrymanufacturingisunderthreatofextinction,
otherwisediscouraged,whiledomestictradinghasbecomemoreattractiveandasaconsequence,neighboring
countries,suchasHongkong,Singapore,Malaysia,Thailand,andotherforeigncompetitorssupplyingthe
Philippinemarketeitherthroughlocalchannelsorthroughtheblackmarketforsmuggledgoodsaretheones
whoaregettingbusinessandmakingmoney,whilemembersofthepetitionerGuildofPhilippineJewelers,Inc.
areconstantlysubjectedtobureaucraticharassmentinsteadofbeinggivenbythegovernmentthenecessary
supportinordertosurviveandgeneraterevenueforthegovernment,andmostofallfightcompetitivelynotonly
inthedomesticmarketbutinthearenaofworldmarketwheretherealcontestis.
Consideringtheallegationsoffactinthepetitionwhichweredulyprovenduringthetrial,theCourtholdsthat
thepetitionstatesacauseofactionandthereexistajusticiablecontroversybetweenthepartieswhichwould
requiredeterminationofconstitutionalityoflawsimposingexcisetaxandcustomsdutyonjewelry.[11](emphasis
ours)
The public respondent, in addressing the third issue, ruled that the laws in question are
confiscatoryandoppressive.Again,virtuallyadoptingverbatimthereasonspresentedbytheprivate
respondentsintheirpositionpaper,thelowercourtstated:
Thecourtfindsthatindeedgovernmenttaxationpolicytrats(sic)hewelry(sic)asnonessentialluxuryitemand
therefore,taxedheavily.Asidefromtheten(10%)percentvalueaddedtax(VAT),localjewelrymanufacturers
contendwiththe(manufacturing)excisetaxoftwenty(20%)percent(tobeappliedinstages)customsdutieson
importedrawmaterials,thehighestintheAsiaPacificregion.Incontrast,importedgemstonesandother
preciousmetalsaredutyfreeinHongkong,Thailand,MalaysiaandSingapore.
Thecourtelaboratesfurtherontheexperienceofothercountriesintheirtreatmentofthejewelrysector.
MALAYSIA
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DutiesandtaxesonimportedgemstonesandgoldandthesalestaxonjewelrywereabolishedinMalaysiain
1984.TheywereremovedtoencouragedthedevelopmentofMalaysiasjewelrymanufacturingindustryandto
increaseexportsofjewelry.
THAILAND
GemsandjewelryareThailandsninthmostimportantexportearner.Inthepast,theindustrywasoverlookedby
successiveadministrationsmuchtothedismayofthoseinvolvedindevelopingtrade.Prohibitiveimportduties
andsalestaxonpreciousgemstonesrestrictedthegrowth(sic)oftheindustry,resultinginmostofthebusiness
beingunofficial.Itwasindeeddifficultforagovernmentorbusinessmantopromoteanindustrywhichdidnot
officiallyexist.
Despitethesecircumstances,ThailandsGembusinesskeptgrowingupin(sic)businessmenbegantorealizeits
potential.In1978,thegovernmentquietlyremovedtheseveredutiesonpreciousstones,butimposedasalestax
of3.5%.Littlewassaidordoneatthattimeasthegovernmentwantedtoseeifafreetradeingemstonesand
jewelrywouldincreaselocalmanufacturingandexportsorifitwouldmeanmoreforeignmadejewelrypouring
intoThailand.However,astimeprogressed,therewereindicationsthatlocalmanufacturingwasindeedbeing
encouragedandtheeconomywasearningmorefromexports.Thegovernmentsoonremovedthe3%salestax
too.PuttingThailandatparwithHongkongandSingapore.Inthesecountries,therearenomoreimportduties
andsalestaxongems.(Citedinpages6and7ofExhibitM.TheCenterforResearchandCommunicationin
cooperationwiththeGuildofPhilippineJewelers,Inc.,June1986).
Toillustrate,shownhereunderinthePhilippinetariffandtaxstructureonjewelryandotherperciousandsemi
preciousstonescomparedtootherneighboringcountries,towit:
Tariffonimported
Jewelryand(MANUFACTURING)SalesTax10%(VAT)
PreciousstonesExciseTax
Philippines3%to10%tobe20%10%VAT
appliedinstages
MalaysiaNoneNoneNone
ThailandNoneNoneNone
SingaporeNoneNoneNone
HongkongNoneNoneNone
Inthisconnection,thepresenttariffandtaxstructureincreasesmanufacturingcostsandrendersthelocal
jewelrymanufacturersuncompetitiveagainstothercountriesevenbeforetheystartmanufacturingandtrading.
Becauseoftheprohibitivecast(sic)oftaxation,mostmanufacturerssourcefromblackmarketforsmuggled
goods,andthatwhilemanufacturerscanavailoftaxexemptionand/ortaxcreditsfromthe(manufacturing)
excisetax,theyhavenodocumentstopresentwhenfilingthisexemptionbecause,aspointedoutearlier,mostof
themsourcetheirrawmaterialsfromtheblackmarket,andsincemanyofthemdonotlegallyexistoroperate
onofficially(sic),orunderground,againtheyhavenorecords(receipts)toindicatewhereandwhentheywill
utilizesuchtaxcredits.(CitedinExhibitMBuencaminoReport).
Giventheseconstraints,thelocalmanufacturerhasnorecoursebuttothebackdoorforsmuggledgoodsifonly
tobeabletocompeteevenineffectively,orceasemanufacturingactivitiesandinsteadengageinthetradinf(sic)
ofsmuggledfinishedjewelry.
Worthyofnotisthefactthatindeednoevidencewasadducedbyrespondentstodisprovetheforegoing
allegationsoffact.Undertheforegoingfactualcircumstances,theCourtfindsthequestionedstatutory
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provisionsconfiscatoryanddestructiveoftheproprietaryrightofthepetitionerstoengageinbusinessin
violationofSection1,ArticleIIIoftheConstitutionwhichstates,asfollows:
Nopersonshallbedeprivedofthelife,liberty,orpropertywithoutdueprocessoflawxxx.[12]
Anent the fourth and last issue, the herein public respondent did not find it necessary to rule
thereon, since, in his opinion, the same has been rendered moot and academic by the
aforementionedpronouncement.[13]
The petitioners now assail the decision rendered by the public respondent, contending that the
latterhasnoauthoritytopassjudgmentuponthetaxationpolicyofthegovernment.In addition, the
petitionersimpugnthedecisioninquestionbyassertingthattherewasnoshowingthatthetaxlaws
onjewelryareconfiscatoryanddesctructiveofprivaterespondentsproprietaryrights.
Weruleinfavorofthepetitioners.
Itisinterestingtonotethatpublicrespondent,inthedispositiveportionofhisdecision,perhaps
keepinginmindhislimitationsunderthelawasatrialjudge,didnotgosofarastodeclarethelawsin
questiontobeunconstitutional.However,thereinhedeclaredthelawstobeinoperativeandwithout
forceandeffectinsofarastheprivaterespondentsareconcerned.But,respondentjudge,inthebody
ofhisdecision,unequivocallybutwronglydeclaredthesaidprovisionsoflawtobeviolativeofSection
1,ArticleIIIoftheConstitution.Infact,intheirSupplementalCommentonthePetitionforReview,[14]
theprivaterespondentsinsistthatJudgeSantos,inhiscapacityasjudgeoftheRegionalTrialCourt,
actedwithinhisauthorityinpassingupontheissues,towit:
Aperusaloftheappealeddecisionwouldundoubtedlydisclosethatpublicrespondentdidnotpassjudgmenton
thesoundnessorwisdomofthegovernmentstaxpolicyonjewelry.True,publicrespondent,inhisquestioned
decision,observed,interalia,thatindeedgovernmenttaxpolicytreatsjewelryasnonessentialitem,and
therefore,taxedheavilythatthepresenttariffandtaxstructureincreasemanufacturingcostandrendersthe
localjewelrymanufacturersuncompetitiveagainstothercountriesevenbeforetheystartmanufacturingand
tradingthatmanyofthelocalmanufacturersdonotlegallyexistoroperateunofficiallyorundergroundand
thatthemanufacturershavenorecoursebuttothebackdoorforsmuggledgoodsifonlytobeabletocompete
evenifineffectivelyorceasemanufacturingactivities.
BUT,publicrespondentdidnot,inanymanner,interferewithorencroachupontheprerogativeofthelegislature
todeterminewhatshouldbethetaxpolicyonjewelry.Ontheotherhand,theissueraisedbefore,andpassed
uponby,thepublicrespondentwaswhetherornotSection150,paragraph(a)oftheNationalInternalRevenue
Code(NIRC)andSection104,Hdg,71.01,71.02,71.03and71,04oftheTariffandCustomsCodeare
unconstitutional,ordifferentlystated,whetherornotthequestionedstatutoryprovisionsaffecttheconstitutional
rightofprivaterespondentstoengageinbusiness.
Itissubmittedthatpublicrespondentconfinedhimselfonthisissuewhichisclearlyajudicialquestion.
Wefinditincongruous,inthefaceofthesweepingpronouncementsmadebyJudgeSantosinhis
decision,thatprivaterespondentscanstillpersistintheirargumentthattheformerdidnotoverreach
therestrictionsdictateduponhimbylaw.ThereisnodoubtintheCourtsmind,despiteprotestations
tothecontrary,thatrespondentjudgeencroacheduponmattersproperlyfallingwithintheprovinceof
legislative functions. In citing as basis for his decision unproven comparative data pertaining to
differencesbetweentaxratesofvariousAsiancountries,andconcludingthatthejewelryindustryin
the Philippines suffers as a result, the respondent judge took it upon himself to supplant legislative
policy regarding jewelry taxation.In advocating the abolition of local tax and duty on jewelry simply
because other countries have adopted such policies, the respondent judge overlooked the fact that
suchmattersarenotforhimtodecide.Therearereasonswhyjewelry,anonessentialitem,istaxed
asitisinthiscountry,andthesereasons,deliberateuponbyourlegislature,arebeyondthereachof
judicialquestioning.AsheldinMacasianovs.NationalHousingAuthority:[15]
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Thepolicyofourcourtsistoavoidrulingonconstitutionalquestionsandtopresumethattheactsofthepolitical
departmentsarevalidintheabsenceofaclearandunmistakableshowingtothecontrary.Todoubtistosustain,
thispresumptionisbasedonthedoctrineofseparationofpowerswhichenjoinsuponeachdepartmenta
becomingrespectfortheactsoftheotherdepartments.ThetheoryisthatasthejointactofCongressandthe
PresidentofthePhilippines,alawhasbeencarefullystudiedanddeterminedtobeinaccordancewiththe
fundamentallawbeforeitwasfinallyenacted.(emphasisours)
WhatweseehereisadebateontheWISDOMofthelawsinquestion.Thisisamatteronwhich
theRTCisnotcompetenttorule.[16]AsCooleyobserved:Debatablequestionsareforthelegislature
todecide.Thecourtsdonotsittoresolvethemeritsofconflictingissues.[17]InAngaravs. Electoral
Commission,[18]JusticeLaurelmadeitclearthatthejudiciarydoesnotpassuponquestionofwisdom,
justice or expediency of legislation. And fittingly so, for in the exercise of judicial power, we are
allowed only to settle actual controversies involving rights which are legally demandable and
enfoceable,andmaynotannulanactofthepoliticaldepartmentssimplybecausewefeelitisunwise
orimpractical.[19]ThisisnottosaythatRegionalTrialCourtshavenopowerwhatsoevertodeclarea
law unconstitutional. In J. M. Tuason and Co. v. Court of Appeals[20] we said that [p]lainly the
Constitution contemplates that the inferior courts should have jurisdiction in cases involving
constitutionality of any treaty or law, for it speaks of appellate review of final judgments of inferior
courtsincaseswhere such constitutionality happens to be in issue.thisauthority oflower courtsto
decidequestionsofconstitutionalityinthefirstinstancewasreaffirmedinYnosv.IntermediateCourt
of Appeals.[21] But this authority does not extend to deciding questions which pertain to legislative
policy.
The trial court is not the proper forum for the ventilation of the issues raised by the private
respondents.Theargumentstheypresentedfocusonthewisdomoftheprovisionsoflawwhichthey
seektonullify.RegionalTrialCourtscanonlylookintothevalidityofaprovision,thatis,whetheror
notithasbeenpassedaccordingtotheprocedureslaiddownbylaw,andthuscannotinquireasto
the reasons for its existence. Granting arguendo that the private respondents may have provided
convincingargumentswhythejewelryindustryinthePhilippinesshouldnotbetaxedasitis,itisto
thelegislaturethattheymustresorttoforrelief,sincewiththelegislatureprimarilyliesthediscretion
todeterminethenature(kind),object(purpose),extent(rate),coverage(subjects)andsitus(place)of
taxation.ThisCourtcannotfreelydelveintothosematterswhich,byconstitutionalfiat,rightlyreston
legislativejudgment.[22]
AssuccinctlyputinLimvs.Pacquing:[23]Whereacontroversymaybesettledanaplatformother
thanoneinvolvingconstitutionaladjudication,thecourtshouldexercisebecomingmodestyandavoid
theconstitutionalquestion.Asjudges,wecanonlyinterpretandapplythelawand,despiteourdoubts
aboutitswisdom,cannotrepealoramendit.[24]
The respondents presented an exhaustive study on the tax rates on jewelry levied by different
Asiancountries.Thisismeanttoconvinceusthatcomparedtoothercountries,thetaxratesimposed
on said industry in the Philippines is oppressive and confiscatory. This Court, however, cannot
subscribe to the theory that the tax rates of other countries should be used as a yardstick in
determiningwhatmaybethepropersubjectsoftaxationinourowncountry.Itshouldbepointedout
that in imposing the aforementioned taxes and duties, the State, acting through the legislative and
executivebranches,isexercisingitssovereignprerogative.Itisinherentinthepowertotaxthatthe
Statebefreetoselectthesubjectsoftaxation,andithasbeenrepeatedlyheldthatinequalitieswhich
result from singling out of one particular class for taxation, or exemption, infringe no constitutional
limitation.[25]
WHEREFORE, premises considered, the petition is hereby GRANTED, and the DECISION in
CivilCaseNo.56736isherebyREVERSEDandSETASIDE.Nocosts.
SOORDERED
Padilla,(Chairman),Bellosillo,Vitug,andKapunan,JJ.,concur.
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[1]CivilCaseNo.56736.
[2]Rollo,pp.829.
[3]TSN,April12,1993,pp.1819Exhibit4ExhibitB.
[4]TSN,April12,1993,pp.2021Exhibits5&5A.
[5]TSN,June16,1993,p.16.
[6]TSN,October21,1992,p.11.
[7]TSN,September16,1992,pp.914pp.4445.
[8]TSN,December7,1992,pp.67.
[9]TSN,September16,1992,pp.914pp.4445.
[10] This position paper was prepared by a certain J. Antonio Buencamino of the Corporate Planning Services Division,

CenterforResearchandCommunicationincooperationwiththeGuildofPhilippineJewelers,Inc.
[11]Decision,pp.78Rollo,pp.3637.
[12]Decision,pp.1012Rollo,pp.3941.
[13]Decision,p.13Rollo,p.42.
[14]Rollo,pp.146147.
[15]Macasianovs.NationalHousingAuthority,224SCRA236(1993),citingGarciavs.ExecutiveSecretary,204SCRA516

(1991).
[16]Ibid.
[17]Ibid.
[18]63Phil.139(1936).
[19]Macasianovs.NationalHousingAuthority,supra.
[20]3SCRA696[1961].
[21]148SCRA659[1987].
[22]Tanvs.DelRosario,Jr.,237SCRA324(1994).
[23]240SCRA649(1995).Seeseparateopinion.
[24]Pangilinanvs.Maglaya,225SCRA511(1993).
[25]Lutzvs.Araneta,98Phil.148(1955)SisonJr.vs.Ancheta,130SCRA654,663(1984)KapatiranngmgaNaglilingkod

sa Pamahalaan ng Pilipinas, Inc. vs. Tan, 163 SCRA 371 (1988) Tolentino vs. Secretary of Finance, 249 SCRA
628(1995).

http://sc.judiciary.gov.ph/jurisprudence/1997/aug1997/119252.htm

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