1

RepublicofthePhilippines
SUPREMECOURT
Manila
FIRSTDIVISION
G.R.No.L29059December15,1987
COMMISSIONEROFINTERNALREVENUE,
petitioner,
vs.
CEBUPORTLANDCEMENTCOMPANYandCOURTOFTAXAPPEALS,
respondents.

CRUZ,
J.:
ByvirtueofadecisionoftheCourtofTaxAppealsrenderedonJune21,1961,asmodifiedonappealbytheSupremeCourtonFebruary27,1965,the
CommissionerofInternalRevenuewasorderedtorefundtotheCebuPortlandCementCompanytheamountofP359,408.98,representingoverpaymentsof
ad
valorem
taxesoncementproducedandsoldbyitafterOctober1957.
1
OnMarch28,1968,followingdenialofmotionsforreconsiderationfiledbyboththepetitionerandtheprivaterespondent,thelattermovedforawritof
2
executiontoenforcethesaidjudgment.

Themotionwasopposedbythepetitioneronthegroundthattheprivaterespondenthadanoutstandingsalestaxliabilitytowhichthejudgmentdebthadalready
3
beencredited.Infact,itwasstressed,therewasstillabalanceowingonthesalestaxesintheamountofP4,789,279.85plus28%surcharge.

OnApril22,1968,theCourtofTaxAppeals
*
grantedthemotion,holdingthattheallegedsalestaxliabilityoftheprivaterespondentwasstillbeingquestioned
4
andthereforecouldnotbesetoffagainsttherefund.

Inhispetitiontoreviewthesaidresolution,theCommissionerofInternalRevenueclaimsthattherefundshouldbechargedagainstthetaxdeficiencyofthe
privaterespondentonthesalesofcementunderSection186oftheTaxCode.Hispositionisthatcementisamanufacturedandnotamineralproductand
thereforenotexemptfromsalestaxes.Headdsthatenforcementofthesaidtaxdeficiencywasproperlyeffectedthroughhispowerofdistraintofpersonal
5
propertyunderSections316and318
ofthesaidCodeand,moreover,thecollectionofanynationalinternalrevenuetaxmaynotbeenjoinedunderSection
6
7
305,
subjectonlytotheexceptionprescribedinRep.ActNo.1125.
Thisisnotapplicabletotheinstantcase.Thepetitioneralsodeniesthatthesalestax
assessmentshavealreadyprescribedbecausetheprescriptiveperiodshouldbecountedfromthefilingofthesalestaxreturns,whichhadnotyetbeendonebythe
privaterespondent.
8
Foritspart,theprivaterespondentdisclaimsliabilityforthesalestaxes,onthegroundthatcementisnotamanufacturedproductbutamineralproduct.
As
such,itwasexemptedfromsalestaxesunderSection188oftheTaxCodeaftertheeffectivityofRep.ActNo.1299onJune16,1955,inaccordancewithCebu
9
PortlandCementCo.v.CollectorofInternalRevenue,
decidedin1968.HereJusticeEugenioAngelesdeclaredthat"beforetheeffectivityofRep.ActNo.
1299,amendingSection246oftheNationalInternalRevenueCode,cementwastaxableasamanufacturedproductunderSection186,inconnectionwith
Section194(4)ofthesaidCode,"therebyimplyingthatitwasnotconsideredamanufacturedproductafterwards.Also,theallegedsalestaxdeficiencycouldnot
asyetbeenforcedagainstitbecausethetaxassessmentwasnotyetfinal,thesamebeingstillunderprotestandstilltobedefinitelyresolvedonthemerits.
Besides,theassessmenthadalreadyprescribed,nothavingbeenmadewithinthereglementaryfiveyearperiodfromthefilingofthetaxreturns.
10

2
Ourrulingisthatthesalestaxwasproperlyimposedupontheprivaterespondentforthereasonthatcementhasalwaysbeenconsideredamanufacturedproduct
andnotamineralproduct.Thismatterwasextensivelydiscussedandcategoricallyresolvedin
CommissionerofInternalRevenuev.RepublicCement
Corporation
,
11
decidedonAugust10,1983,whereJusticeEfrenL.Plana,afteranexhaustivereviewofthepertinentcases,declaredforaunanimousCourt:
Fromalltheforegoingcases,itisclearthatcement
qua
cementwasneverconsideredasamineralproductwithinthemeaningofSection246
oftheTaxCode,notwithstandingthatatleast80%ofitscomponentsareminerals,forthesimplereasonthatcementistheproductof
a
manufacturing
processandisnolongerthemineralproductcontemplatedintheTaxCode(i.e.mineralssubjectedtosimpletreatments)for
thepurposeofimposingthe
advalorem
tax.

WhathasapparentlyencouragedthehereinrespondentstomaintaintheirpresentpostureisthecaseofCebuPortlandCementCo.v.Collector
ofInternalRevenue,L20563,Oct.29,1968(28SCRA789)pennedbyJusticeEugenioAngeles.Forsomeportionsofthatdecisiongivethe
impressionthatRepublicActNo.1299,whichamendedSection246,reclassifiedcementasamineralproductthatwasnotsubjecttosalestax.
...
xxxxxxxxx
Afteracarefulstudyoftheforegoing,weconcludethatrelianceonthedecisionpennedbyJusticeAngelesismisplaced.Thesaiddecisionis
noauthorityforthepropositionthat
after
theenactmentofRepublicActNo.1299in1955(definingmineralproductasthingswithatleast
80%mineralcontent),cementbecamea'mineralproduct,"asdistinguishedfroma"manufacturedproduct,"andthereforeceasedtobesubject
tosalestax.ItwasnotnecessaryfortheCourttosorule.ItwasenoughfortheCourttosayineffectthatevenassumingRepublicActNo.1299
hadreclassifiedcementwasamineralproduct,thereclassificationcouldnotbegivenretrospectiveapplication(soastojustifytherefundof
salestaxespaidbeforeRepublicAct1299wasadopted)becauselawsoperateprospectivelyonly,unlessthelegislativeintenttothecontraryis
manifest,whichwasnotsointhecaseofRepublicAct1266.[ThesituationwouldhavebeendifferentiftheCourtinsteadhadruledinfavorof
refund,inwhichcaseitwouldhavebeenabsolutelynecessary(1)tomakeanunconditionalrulingthatRepublicAct1299reclassifiedcement
asamineralproduct(notsubjecttosalestax),and(2)todeclarethelawretroactive,asabasisforgrantingrefundofsalestaxpaidbefore
RepublicAct1299.]
Inanyevent,weoverruletheCEPOCdecisionofOctober29,1968(G.R.No.L20563)insofarasitspronouncementsoranyimplication
therefromconflictwiththeinstantdecision.
Theaboveviewswerereiteratedintheresolution
12
denyingreconsiderationofthesaiddecision,thus:
Thenatureofcementasa"manufacturedproduct"(ratherthana"mineralproduct")iswellsettled.Theissuehasrepeatedlypresenteditselfas
athresholdquestionfordeterminingthebasisforcomputingthe
advalorem
miningtaxtobepaidbycementCompanies.Nopronouncement
wasmadeinthesecasesthatasa"manufacturedproduct"cementissubjecttosalestaxbecausethiswasnotatissue.
ThedecisionsoughttobereconsideredherereferredtothelegislativehistoryofRepublicActNo.1299whichintroducedadefinitionofthe
terms"mineral"and"mineralproducts"inSec.246oftheTaxCode.Giventhelegislativeintent,theholdingintheCEPOCcase(G.R.No.
L20563)thatcementwassubjecttosalestaxpriortotheeffectivity
fRepublicActNo.1299cannotbeconstruedtomeanthat,afterthelaw
tookeffect,cementceasedtobesosubjecttothetax.Toeraseanyandallmisconceptionsthatmayhavebeenspawnedbyrelianceonthecase
of
CebuPortlandCementCo.v.CollectorofInternalRevenue,
L20563,October29,1968(28SCRA789)pennedbyJusticeEugenio

3
Angeles,theCourthasexpresslyoverruleditinsofarasitmayconflictwiththedecisionofAugust10,1983,nowsubjectofthesemotionsfor
reconsideration.
Onthequestionofprescription,theprivaterespondentclaimsthatthefiveyearreglementaryperiodfortheassessmentofitstaxliabilitystartedfromthetimeit
fileditsgrosssalesreturnsonJune30,1962.Hence,theassessmentforsalestaxesmadeonJanuary16,1968andMarch4,1968,werealreadyoutoftime.We
disagree.ThiscontentionmustfailforwhatCEPOCfiledwasnotthesalesreturnsrequiredinSection183(n)butthe
advalorem
taxreturnsrequiredunder
Section245oftheTaxCode.AsJusticeIreneR.Cortesemphasizedintheaforestatedresolution:
InordertoavailitselfofthebenefitsofthefiveyearprescriptionperiodunderSection331oftheTaxCode,thetaxpayershouldhavefiledthe
requiredreturnforthetaxinvolved,thatis,asalestaxreturn.(ButuanSawmill,Inc.v.CTA,etal.,G.R.No.L21516,April29,1966,16
SCRA277).ThusCEPOCshouldhavefiledsalestaxreturnsofitsgrosssalesforthesubjectperiods.Bothpartiesadmitthatreturnswere
madeforthe
advalorem
miningtax.CEPOCarguesthatsaidreturnscontaintheinformationnecessaryfortheassessmentofthesalestax.The
Commissionerdoesnotconsidersuchreturnsascompliancewiththerequirementforthefilingoftaxreturnssoastostarttherunningofthe
fiveyearprescriptiveperiod.
WeagreewiththeCommissioner.Ithasbeenheldin
ButuanSawmillInc.v.CTA,supra,
thatthefilingofanincometaxreturncannotbe
consideredassubstantialcompliancewiththerequirementoffilingsalestaxreturns,inthesamewaythatanincometaxreturncannotbe
consideredasareturnforcompensatingtaxforthepurposeofcomputingtheperiodofprescriptionunderSec.331.(CitingBisayaLand
TransportationCo.,Inc.v.CollectorofInternalRevenue,G.R.Nos.L12100andL11812,May29,1959).Therebeingnosalestaxreturns
filedbyCEPOC,thestatuteofstationsinSec.331didnotbegintorunagainstthegovernment.TheassessmentmadebytheCommissionerin
1968onCEPOC'scementsalesduringtheperiodfromJuly1,1959toDecember31,1960isnotbarredbythefiveyearprescriptiveperiod.
Absentareturnorwhenthereturnisfalseorfraudulent,theapplicableperiodisten(10)daysfromthediscoveryofthefraud,falsityor
omission.Thequestioninthiscaseis:WhenwasCEPOC'somissiontofilethareturndeemeddiscoveredbythegovernment,soastostartthe
runningofsaidperiod?
13
Theargumentthattheassessmentcannotasyetbeenforcedbecauseitisstillbeingcontestedlosessightoftheurgencyoftheneedtocollecttaxesas"the
lifebloodofthegovernment."Ifthepaymentoftaxescouldbepostponedbysimplyquestioningtheirvalidity,themachineryofthestatewouldgrindtoahalt
andallgovernmentfunctionswouldbeparalyzed.Thatisthereasonwhy,savefortheexceptionalreadynoted,theTaxCodeprovides:
Sec.291.
Injunctionnotavailabletorestraincollectionoftax.
Nocourtshallhaveauthoritytograntaninjunctiontorestrainthecollection
ofanynationalinternalrevenuetax,feeorchargeimposedbythisCode.
Itgoeswithoutsayingthatthisinjunctionisavailablenotonlywhentheassessmentisalreadybeingquestionedinacourtofjusticebutmoresoif,asinthe
instantcase,thechallengetotheassessmentisstillandonlyontheadministrativelevel.Thereisallthemorereasontoapplytheruleherebecauseitappearsthat
evenaftercreditingoftherefundagainstthetaxdeficiency,abalanceofmorethanP4millionisstillduefromtheprivaterespondent.
Torequirethepetitionertoactuallyrefundtotheprivaterespondenttheamountofthejudgmentdebt,whichhewilllaterhavetherighttodistrainforpaymentof
itssalestaxliabilityisinourviewanIdleritual.WeholdthattherespondentCourtofTaxAppealserredinorderingsuchacharade.
WHEREFORE,thepetitionisGRANTED.TheresolutiondatedApril22,1968,inCTACaseNo.786isSETASIDE,withoutanypronouncementastocosts.
SOORDERED.
Teehankee,C.J.,Narvasa,ParasandGancayco,JJ.,concur.