Commissioner of Internal Revenue v. Fortune Tobacco Corp.

SPECIAL SECOND DIVISION [CA G.R. SP No. 80675. September 28, 2004.] COMMISSIONER OF INTERNAL REVENUE , petitioner , vs . FORTUNE TOBACCO CORPORATION , respondent . [CA G.R. SP No. 83165. September 28, 2004.] COMMISSIONER OF INTERNAL REVENUE , petitioner , vs . FORTUNE TOBACCO CORPORATION , respondent . D E C I S I O N SABIO, J. L., Jr. , J p : The Case Before the Court are the consolidated petitions for review under Rule 43 of the 1997 Rules of Civil Procedure seeking to annul and set aside the following Decisions and Resolutions of the Court of Tax Appeals: (1) in CA GR SP No. 80675, the Resolutions dated November 4, 2003 and March 17, 2004 in CTA Case Nos. 6365 and 6383; and (2) in CA GR SP No. 83165, the December 4, 2003 Decision and the March 17, 2004 Resolution in CTA Case No. 6612, reversing the previous ruling of the Commissioner of Internal Revenue and granting respondent Fortune Tobacco Corporation's claim for refund of the amounts of P680,387,025.00 and P355,385,920.00, respectively, representing erroneously paid excise taxes. The Facts CA GR SP NO. 80675 The facts of this case are summarized by the Court of Tax Appeals in its October 21, 2002 Decision in this wise: "Petitioner is a domestic corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, with principal address at Fortune Avenue, Parang, Marikina City. Petitioner is the manufacturer/producer of, among others, the following cigarette brands, with tax rate classification based on net retail price prescribed by Annex "D" to RA 4280, to wit: Brand Tax Rate Champion M 100 P1.00 Salem M 100 P1.00 Salem M King P1.00 Camel F King P1.00 Camel Lights Box 20's P1.00 Camel Filters Box 20's P1.00 Winston F King P5.00 Winston Lights P5.00 Immediately prior to January 1, 1997, the above-mentioned cigarette brands were subject to ad valorem tax pursuant to then Section 142 of the Tax Code of 1977, as amended. However, on January 1, 1997, RA No. 8240 took effect whereby a shift from the ad valorem tax (AVT) system to the specific tax system was made and subjecting the aforesaid cigarette brands to specific tax under section 142 thereof, now renumbered as Sec. 145 of the Tax Code of 1997, pertinent provisions of which are quoted thus: "Section 145. Cigars and Cigarettes . "(A) Cigars . There shall be levied, assessed and collected on cigars a tax of One peso (P1.00) per cigar. "(B). Cigarettes packed by hand . There shall be levied, assessed and collected on cigarettes packed by hand a tax of Forty centavos (P0.40) per pack. IHcSCA "(C) Cigarettes packed by machine . There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below: "(1) If the net retail price (excluding the excise tax and the value-added tax) is above Ten pesos (P10.00) per pack, the tax shall be Twelve (P12.00) per pack; "(2) If the net retail price (excluding the excise tax and the value added tax) exceeds Six pesos and Fifty centavos (P6.50) but does not exceed Ten pesos (P10.00) per pack, the price shall be Eight Pesos (P8.00) per pack; "(3) If the net retail price (excluding the excise tax and the value-added tax) is Five pesos (P5.00) but does not exceed Six Pesos and fifty centavos P6.50) per pack, the tax shall be Five pesos (P5.00) per pack; "(4) If the net retail price (excluding the excise tax and the value-added tax) is below Five pesos (P5.00) per pack , the tax shall be One peso (P1.00) per pack; "Variants of existing brands of cigarettes which are introduced in the domestic market after the effectivity of RA No. 8240 shall be taxed under the highest classification of any variant of that brand. "The excise tax from any brand of cigarettes within the next three (3) years from the effectivity of RA 8240 shall not be lower than the tax, which is due from each brand on October 1, 1996. Provided, however, that in cases were ( sic ) the excise tax rate imposed in paragraphs (1), (2), (3) and (4) hereinabove will result in an increase in excise tax of more than seventy percent (70%), for a brand of cigarette, the increase shall take effect in two tranches: fifty percent (50%) of the increase shall be effective in 1997 and one hundred percent (100%) of the increase shall be effective in 1998. "Duly registered or existing brands of cigarettes or new brands thereof packed by machine shall only be packed in twenties. " The rates of excise tax on cigars and cigarettes under paragraphs (1), (2), (3) and (4) hereof, shall be increased by twelve percent (12%) on January 1, 2000 . (Emphasis supplied) "New brands shall be classified according to their current net retail price. "For the above purpose, ' net retail price ' shall mean the price at which the cigarette is sold on retail in twenty (20) major supermarkets in Metro Manila (for brands of cigarettes marketed nationally), excluding the amount intended to cover the applicable excise tax and the value-added tax. For brands which are marketed only outside Metro Manila, the ' net retail price ' shall mean the price at which the cigarette is sold in five (5) major supermarkets in the region excluding the amount intended to cover the applicable excise tax and the value-added tax. "The classification of each brand of cigarettes based on its average retail price as of October 1, 1996, as set forth in Annex "D", shall remain in force until revised by Congress. "' Variant of a brand ' shall refer to a brand on which a modifier is prefixed and/or suffixed to the root name of the brand and/or a different brand which carries the same logo or design of the existing brand." To implement the provisions for a twelve percent (12%) increase of excise tax on, among others, cigars and cigarettes packed by machines by January 1, 2000, the Secretary of Finance, upon recommendation of the respondent Commissioner of Internal Revenue, issued Revenue Regulations No. 17-99 dated December 16, 1999, which provides the increase on the applicable tax rates on cigar and cigarettes as follows: SECTION DESCRIPTION OF PRESENT NEW ARTICLES SPECIFIC TAX SPECIFIC RATE PRIOR TAX RATE TO JAN. 1, 2000 EFFECTIVE JAN. 1, 2000 145 (A) P1.00/cigar P1.12/cigar (B) Cigarettes packed by machine (1) Net retail price P12.00 per pack P13.44 per (excluding pack VAT and excise) (2) Exceeds P8.00/pack P8.96/pack P10.00 per pack (3) Net retail price P5.00/pack P5.60/pack (excluding VAT and excise) is P5.00 to P6.50 per pack (4) Net Retail P1.00/pack P1.12/pack Price (excluding VAT and excise) is below P5.00 per pack Revenue Regulations No. 17-99 likewise provides in the last paragraph of Section 1 thereof, " (t)hat the new specific tax rate for any existing brand of cigars, cigarettes packed by machine, distilled spirits, wines and fermented liquor shall not be lower than the excise tax that is actually being paid prior to January 1, 2000 ". (Emphasis supplied) For the period covering January 131, 2000, petitioner allegedly paid specific taxes on all brands manufactured and removed in the total amount of P585,705,250.00. (Statement of Productions and Removals with Corresponding Specific tax payment for the period January 1 to 31, 2000, Annex "D", Stipulation of Facts, Documents and Issues ). HTcDEa On February 7, 2000, petitioner filed with respondent's Appellate Division a claim for refund or tax credit of its purportedly overpaid excise tax for the month of January 2000 in the amount of P35,651,410.00. On June 21, 2001, petitioner filed with respondent's Legal Service a letter dated June 20, 2001 reiterating all the claims for refund/tax credit of its overpaid excise taxes filed on various dates, including the present claim for the month of January 2000 in the amount of P35,651,410.00 ( Annex "G", Petition for Review ). As there was no action on the part of the respondent, petitioner filed the instant petition for review with this Court on December 11, 2001, in order to comply with the two-year period for filing a claim for refund. In his answer filed on January 16, 2002, respondent raised the following Special and Affirmative Defenses: "4. Petitioner's alleged claim for refund is subject to administrative routinary investigation/examination by the Bureau; 5. The amount of P35,651,410 being claimed by petitioner as alleged overpaid excise tax for the month of January 2000 was not properly documented; 6. In an action for tax refund, the burden of proof is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to its claim for refund/credit; 7. Petitioner must show that it has complied with the provisions of Section 204(C) in relation Section 229 of the Tax Code on the prescriptive period for claiming tax refund/credit; 8. Claims for refund are construed strictly against the claimant for the same partake of tax exemption from taxation; and 9. The last paragraph of Section 1 of Revenue Regulation 17-99 is a valid implementing regulation which has the force and effect of law." (Pp. 16, October 1, 2002 Decision; pp. 154159, Rollo ) CA GR SP NO. 83165 The petition contains essentially similar facts, except that the said case questions the CTA's December 4, 2003 decision in CTA Case No. 6612 granting respondent's claim for refund of the amount of P355,385,920.00 representing erroneously or illegally collected specific taxes covering the period January 1, 2002 to December 31, 2002, as well as its March 17, 2004 Resolution denying a reconsideration thereof. The Ruling of the Court of Tax Appeals In both CTA Case Nos. 6365 & 6383 and CTA Case No. 6612, the Court of Tax Appeals reduced the issues to be resolved into two as stipulated by the parties, to wit: (1) Whether or not the last paragraph of Section 1 of Revenue Regulation 17-99 is in accordance with the pertinent provisions of Republic Act 8240, now incorporated in Section 145 of the Tax Code of 1997; and (2) Whether or not petitioner is entitled to a refund of P35,651,410.00 as alleged overpaid excise tax for the month of January 2000; Resolving the issues in CTA Case No. 6365, the CTA ruled on the invalidity of the last paragraph of Revenue Regulation No. 17-99. The CTA declared: "At first glance, the said regulation appears to be simply implementing the provisions of Section 142, RA 8240, now incorporated in Tax Code of 1997 as Section 145, the pertinent provisions of which state: xxx xxx xxx "The excise tax from any brand of cigarettes within the next three years from the effectivity of RA 8240 shall not be lower than the tax, which is due from each brand on October 1, 1996: provided, however, that in cases were the excise tax rates imposed on paragraphs (1), (2), (3) and (4) hereinabove will result in an increase in excise tax of more than 70%, for a brand of cigarette, the increase shall take effect in two branches: fifty percent (50%) of the increase shall be effective in 1997 and one hundred percent (100%) of the increase shall be effective in 1998. cDTHIE xxx xxx xxx "The rates of excise tax on cigars and cigarettes under paragraphs (1), (2), (3), and (4) hereof, shall be increased by twelve percent (12%) on January 1, 2000. "The classification of each brand of cigarettes based on its average retail price as of October 1, 1996, as set forth in Annex "D", shall remain in force until revised by Congress." However, a more thorough analysis of the same proves that the questioned regulation does not merely implement but actually results to an unauthorized "administrative legislation". Clearly, the aforequoted provisions merely mandate that the three-year transition period within which it is to be operative, starting from January 1, 1997, the date when RA 8240 took effect, expired on December 31, 1999. During the said three-year period the tax shall not be lower than the tax imposed for each brand on October 1, 1996. Thereafter, effective January 1, 2000, a 12% increase would take effect using as tax base the figures provided in Section 145, Subsection C, paragraph (1), (2), (3) and (4) of R.A. 8424, otherwise known as the Tax Code of 1997. While we may agree with the respondent that administrative agencies in the exercise of their rule-making power can formulate rules and regulations in order to achieve the declared policies as laid down by Congress, the same does not hold true in the present case. The BIR, in issuing Revenue Regulations No. 17-99, went beyond the legal parameters that defined the boundaries of its authority. In Teoxon vs. Members of the Board of Administrators, Philippine Veterans Administration , 33 SCRA 585, the Supreme Court defined the parameters of this rule-making power of an administrative agency in this wise: " The power of administrative officials to promulgate rules in the implementation of the statute is necessarily limited to what is provided for in the legislative enactment . It cannot be otherwise as the Constitution limits the authority of the President, in whom all executive power resides, to take care that the laws be faithfully executed. No lesser administrative executive office or agency then can, contrary to the express language of the Constitution, assert to itself a more extensive prerogative. An administrative agency cannot amend an act of Congress ." (Emphasis supplied) And in the case of Philippine Bank of Communications vs. Commissioner of Internal Revenue , 302 SCRA 241, the Highest Tribunal ruled on the nature of revenue memorandum circulars, thus: "It bears repeating that Revenue Memorandum circulars are considered administrative rulings (in the sense of more specific and less general interpretations of tax laws) which are issued from time to time by the Commissioner of Internal Revenue. It is widely accepted that the interpretation placed upon a statute by the executive officers, whose duty is to enforce it, is entitled to great respect by the courts. ( Emphasis supplied ) Adopting the argument of respondent and declaring the questioned regulation as valid would put to naught the provisions of Sections 145 of the Tax Code of 1997, particularly the directive that, "The rates of excise tax on cigars and cigarettes under paragraphs (1), (2), (3), and (4) hereof shall be increased by twelve (12%) on January 1, 2000." This is in lieu of the tax rate being imposed prior to January 1, 2000. It is worthy to emphasize that with respect to the initial increase of excise tax from any brand of cigarettes within the next three (3) years from the effectivity of R.A. No. 8240, Section 145 clearly provides that the excise tax shall not be lower than the tax, which is due from each brand on October 1, 1996 . Such qualification is wanting as to the increase by 12% on January 1, 2000 in the rates of excise tax on cigars and cigarettes under paragraphs (1), (2), (3), and (4) of the same section. Thus, the inevitable conclusion would be to impose the new rates of excise tax under paragraphs (1) to (4) which is increased by 12%, even if it may be lower than the amount to tax being paid prior to January 1, 2000. The rule in this jurisdiction is that the intent of the legislature is to be ascertained from the very language of the statute. Verba legis non est recedendum , or from the words of the statute there should be no departure. The law, needless to state, is clear and would not need a revenue regulation to clarify certain provisions nor impose a burden not found in the piece of legislation it is supposed to implement. This cannot be done nor authorized to be done by a mere department or agency of the government ( Animos vs. Philippine Veterans Affairs Office, et al ., 174 SCRA 214 ). Any regulation, such as Revenue Regulations No. 17-99, that stretches this authority amounts to unauthorized legislation. AaCEDS In view of the foregoing, Revenue Regulations No. 17-99 is deemed invalid." (Decision, pp. 814; pp. 161167, Rollo ) As to the second issue, the CTA likewise ruled in favor of the appellant, stating: ". . . The records, including the stipulations of facts, documents and issues of the parties disclose that the issue on the refundable amount was no longer disputed. Significant are the stipulations in the Joint Stipulation of facts, documents and issues where the parties admitted the due execution and/or authenticity of the following documents: 1. Copy of Republic Act 8240; 2. Copy of Revenue Regulations No. 17-99 dated December 16, 1999; 3. Copies of the official receipts of excise tax deposit of petitioner for the month of January 2000; 4. Copy of the BIR statement of production and removals with corresponding specific tax payments. The parties likewise stipulated on the mathematical accuracy of the following documents: 1. Copy of the January 2000 Summary of advance excise tax deposits; taxes applied (debited); and running balances; 2. Copy of the comparative computation of excise tax payments showing overpayment for the month of January 2000. The aforementioned official receipts showed that petitioner paid advance excise taxes from January 7, 2000 to January 31, 2000 in the aggregate sum of P525,000,000.00. In its January 2000 Summary of Advance Excise tax Deposits; taxes applied (Debited); and "Running Balances", petitioner had excise tax deposit balance as of January 1, 2000 of P151,309,561.34 ( Stipulation of facts, Documents and issues, Annex "E" ). Thus, petitioner's accumulated excise tax payments as of January 31, 2001 amounted to P676,309,561.34 (P151,309,561.34 plus 525,000,000.00). Based on the statement of petitioner's production and removals with corresponding specific tax payments for the month of January, 2000 prepared by the BIR representative ( Stipulation of facts, Documents and Issues, Annex "D" ), petitioner was actually charged specific taxes in the total amount of P585,705,250.00, thus leaving a balance of excise tax deposit of P90,604,311.34 as of January 31, 2000. The above-mentioned actual specific tax payment of P585,705,250.00 was based on the provision of Section 1 of Revenue Regulations No. 17-99 wherein the specific tax rate, which was applied on each brand of petitioner's products, was the higher rate between the ad valorem tax due as of October 1, 1996 and the specific tax rate under Section 145 increased by 12%. Hence, petitioner paid specific taxes on the following brands, which were higher than the specific tax rates prescribed under paragraphs (3) and (4) of Section 145 increased by 12%: Basic Tax Rate Brand Actual Specific Tax Paid under Section 145 Per RR No. 17-99 plus 12% Per case Per pack Per case Per pack Champion M 100 P1,650.00 P3.30 P560.00 P1.12 Salem M 100 3,480.00 6.96 560.00 1.12 Salem M King 2,750.00 5.50 560.00 1.12 Camel F King 2,750.00 5.50 560.00 1.12 Camel Lts. Box 20's 2,750.00 5.50 560.00 1.12 Camel Filters Box 20's 2,750.00 5.50 560.00 1.12 Winston F King 2,925.00 5.85 2,800.00 5.60 Winston Lights 2,925.00 5.85 2,800.00 5.60 The foregoing prove that petitioner had overpaid the specific taxes due on its volume of removals for the aforementioned brands for the month of January, 2000 in the total amount of P35,651,410.00 summarized in Annex "F" of the Stipulation of Facts, Documents and Issues as follows: Specific tax due Brand Volume of Actual Specific based on basic Removals Tax Paid Per rate under (in cases) RR No. 17-99 Section 145 Plus 12% Overpayment Champion M 100 3,282 P5,415,300.00 P1,837,920.00 P3,577,380.00 Salem M 100 121 421,080.00 67,760.00 353,320.00 Salem M King 1,025 2,818,750.00 574,000.00 2,244,750.00 Camel F King 8,419 23,152,250.00 4,714,640.00 18,437,610.00 Camel Lts. Box 20's 730 2,007,500.00 408,800.00 1,598,700.00 Camel Filters Box 20's 735 2,021,500.00 411,600.00 1,609,650.00 Winston F King 61,740 180,589,500.00 172,872,000.00 7,717,500.00 Winston Lights 900 2,632,500.00 2,520,000.00 112,500.00 P219,058,130.00 P183,406,720.00 P35,651,410.00 Hence, the respondent CTA in its assailed October 21, 2002 Decision disposed in CTA Case Nos. 6365 & 6383: "WHEREFORE, in view of the foregoing, the court finds the instant petition meritorious and in accordance with law. Accordingly, respondent is hereby ORDERED to REFUND to petitioner the amount of P35,651,410.00 representing erroneously paid excise taxes for the period January 1 to January 31, 2000. cECaHA SO ORDERED." Herein petitioner sought reconsideration of the above-quoted decision. In a resolution dated July 15, 2003, the Tax Court, in an apparent change of heart, granted the petitioner's consolidated motions for reconsideration, thereby denying the respondent's claim for refund. However, on consolidated motions for reconsideration filed by the respondent in CTA Case Nos. 6363 and 6383, the July 15, 2002 resolution was set aside, and the Tax Court ruled, this time with a semblance of finality, that the respondent is entitled to the refund claimed. Hence, in a resolution dated November 4, 2003, the tax court reinstated its December 21, 2002 Decision and disposed as follows: "WHEREFORE, our Decisions in CTA Case Nos. 6365 and 6383 are hereby REINSTATED. Accordingly, respondent is hereby ORDERED to REFUND petitioner the total amount of P680,387,025.00 representing erroneously paid excise taxes for the period January 1, 2000 to January 31, 2000 and February 1, 2000 to December 31, 2001. SO ORDERED." Meanwhile, on December 4, 2003, the Court of Tax Appeals rendered decision in CTA Case No. 6612 granting the prayer for the refund of the amount of P355,385,920.00 representing overpaid excise tax for the period covering January 1, 2002 to December 31, 2002. The tax court disposed of the case as follows: "IN VIEW OF THE FOREGOING, the Petition for Review is GRANTED. Accordingly, respondent is hereby ORDERED to REFUND to petitioner the amount of P355,385,920.00 representing overpaid excise tax for the period covering January 1, 2002 to December 31, 2002. SO ORDERED." Petitioner sought reconsideration of the decision, but the same was denied in a Resolution dated March 17, 2004. Feeling aggrieved by the assailed Decisions and Resolutions of the Court of Tax Appeals, the Commissioner of Internal Revenue brought the instant petition for review, raising the following identical assignment of errors in both SP 89675 and SP 83165, to wit: I THE TAX COURT ERRED IN HOLDING THAT THE LAST PARAGRAPH OF SECTION 1 OF REVENUE REGULATIONS NO. 17-99 IS AN UNAUTHORIZED ADMINISTRATIVE REGULATION II THE TAX COURT ERRED IN NOT HOLDING THAT THE LEGISLATIVE INTENT OF RA NO. 8240 IS TO INCREASE THE RATES OF EXCISE TAX ON, AMONG OTHERS, CIGARS AND CIGARETTES, IN ORDER TO COLLECT MORE REVENUES III THE TAX COURT ERRED IN NOT HOLDING THAT THE LAST PARAGRAPH OF SECTION 1 OF REVENUE REGULATIONS NO. 17-99 IS IN ACCORDANCE WITH THE LEGISLATIVE INTENT OF RA NO. 8240 In support thereof, petitioner argues, firstly, that the BIR, as an administrative agency responsible for revenue collection and enforcement, is duty-bound to carry out the congressional policy of regulating specified activities and to raise revenues through the proper collection of taxes. This mandate, according to petitioner, is specifically provided in Section 244 in relation to Section 4 of the Tax Code of 1997, as well as in Section 10 of RA 8240. Based on the cited provisions, the general prohibition on non-delegation of legislative power allows certain exceptions, one of which is the BIR. Its exercise of administrative legislation is not illegal per se , as administrative agencies in the exercise of their rule-making power can formulate rules and regulations in order to achieve the declared policies as laid down by Congress. This exercise of discretion is permissible provided that what is being delegated is not the discretion as to what the law shall be but only the discretion as to its execution. aHTEIA Secondly, petitioner defends the constitutionality of the questioned provisions of Revenue Regulations 17-99 explaining that the intent and purpose in enacting Republic Act 8240 and Section 145 of the Tax Code is seen from the Sponsorship Speech of Senator Enrile and in his answers to the interpellations disclosed that said bill was the most important component of the Comprehensive Tax reform Program through which the government expects to raise as much as P6 Billion in additional revenue to finance its economic developments and progress. Petitioner reasoned that the tax Court did not consider the raison d' etre of the law when it interpreted the provisions of RA 8240 and Section 145, NIRC literally. Citing the cases of Commissioner of Internal Revenue vs. S.C. Johnson and Sons, Inc . GR No. 127105, June 25, 1999, petitioner contends that it is the duty of the Courts in interpreting the provisions of the statutes to look to the object to be accomplished, the evils to be remedied, or the purpose to be subserved, and should give the law a reasonable or liberal construction which will best effectuate its purpose. Petitioner finds fault in the holding of the Tax Court that the last paragraph of Section 1 of Revenue Regulations No. 17-99 is not in accordance with the legislative intent of RA 8240. Petitioner disagrees with the conclusion of the tax court that to impose the new rates of excise taxes under paragraphs (1) to (4) which is to increase by 12%, even if it may be lower than the amount of a tax being paid prior to January 1, 2000 as it would defeat the very purpose of the law. Petitioner illustrates: "Under Section 4 of Revenue Regulations No. 1-97 implementing the provisions of RA 8240, the specific tax rates as of January 1, 1997 of some cigarette brands involved in this case are as follows: Brands Specific Tax Rate Champion M 100 P3.30 Salem M 100 P6.96 Salem M King P5.50 On the other hand, under Section 142 (now 1450 of the Tax Code, the tax Rate on the aforesaid brands starting January 1, 2000 is P1.00 plus 12% thereof, or P1.12, which is much lower than the rates prior to January 1, 2001. The last paragraph of Section 1 of Revenue Regulations No. 17-99 would not put to naught the provisions of Section 145 of the Tax Code of 1997, particularly the directive that "the rates of excise tax on cigars and cigarettes under paragraphs (1), (2), (3), (4) hereof shall be increased by twelve percent (12%) on January 1, 2000. On the contrary, it would harmonize and give the law a clearer meaning. The Tax Court's opinion would create an absurd situation where despite an increase in the tax rates, it will also entail a sudden drop in revenue collection. It implies that after January 1, 2000, a new tax regime will apply wherein the rates stated in section 145 (C) (4) shall govern and the other pertinent provision of Section 145 will automatically cease and expire. Parts of a statute should not be viewed in isolation. A cardinal rule in statutory construction is that the legislative intent must be ascertained from a consideration of the statute as a whole, and not of an isolated part or a particular provision alone. In fact, other provisions of RA 8240 (now Section 145) clearly indicate such intention to increase the tax rates thus, in Section 4, it even provided a transition period to cushion such increase. The specific tax for any brand of cigarettes within the next three years of effectivity of said act shall not be lower than the tax which is due from each brand on October 1, 1996. However, the increase in excise tax shall take effect on two tranches if the increase is more than 70% for a brand of cigarettes. Come January 1, 2000, the rate of specific tax in cigars and cigarettes shall be increased by 12%. Clearly, the intention is to increase the tax rate. It will be absurd if it will be interpreted otherwise, that while the law wants to cushion the increase in the next three years from the effectivity of RA 8240, it will suddenly drop the tax rate in the following year. To prevent such a situation and to express the law's real intention, the last paragraph of Section 1 of Revenue Regulations 17-99 was aimed at implementing the 132% increase of the excise tax on cigars and cigarettes, among others, beginning January 1, 2000. Precisely, the intent of the law was to generate an increase in revenue collection from these sin products." The Issues The issues for this Court's resolution remain: I Whether or not the last paragraph of Section 1 of Revenue Regulations No. 17-99 is in accordance with the pertinent provisions of Republic Act 8240, now incorporated in Section 145 of the Tax Code of 1997; and SCaTAc II Whether or not the petitioner is entitled to a refund of P355,385,920.00 as alleged overpaid excise tax for the period from January 1 to December 31, 2002. The resolution of the above-enumerated issues hinges on the proper interpretation of RA 8240, now embodied in the Tax Code as Section 145, to wit: "The specific tax from any brand of cigarettes within the next three years of effectivity of this act shall not be lower than the tax which is due from each brand on October 1, 1996; provided, however, that in cases where the specific tax rates imposed in [paragraph (1), (2), (3), and (4) hereinabove will result in an increase in excise tax of more than seventy percent for a brand of cigarette, the increase shall take effect in two tranches: fifty percent (50%) of the increase shall be effective in 1997 and one hundred (100%) of the increase shall be effective in 1998." "The rates of excise tax on cigars and cigarettes under paragraphs (1), (2), (3), and (4) hereof, shall be increased by 12% on January 1, 2000." vis a vis the last paragraph of Section 1 of Revenue Regulations No. 17-99: "(t)hat the new specific tax rate for any existing brand of cigars, cigarettes packed by machine, distilled spirits, wines and fermented liquor shall not be lower than the excise tax that is actually being paid prior to January 1, 2000." Our Ruling We deny the petition. First . Does the assailed Section 1 of Revenue Regulations No. 17-99 have the effect of altering in any manner, the provisions of Section 4 of Republic Act 8240, now incorporated as Section 145 of the Tax Code of 1997 so as to characterize it as an unauthorized administrative legislation and hence, should be declared null and void? The answer is in the affirmative. One of the basic principles of taxation in our jurisdiction is that the taxing power is peculiarly and exclusively legislative and remains undiminished in the legislature in the absence of an express surrender thereof, clear and explicit in its terms ( Benjamin Aban, Laws of Basic Taxation in the Philippines, 1994 Edition ). Consequently, the power of taxation as a general rule may not be delegated, save in certain exceptional cases. More often than not, whenever the question of delegation of the legislative power to tax props up before the courts, it becomes important to delineate the boundaries between what constitutes tax legislation and tax administration. This is so because if what is delegated is tax legislation, the delegation is invalid. But if what is involved is only tax administration the non-delegability rule is not violated. Precisely to obviate any possible invalid exercise of the power of taxation, the legislature in enacting the present National Internal Revenue Code, outlined, under Section 2 thereof, the powers and duties of the Bureau of Internal Revenue, the implementing arm of the legislature. These powers and duties comprehend the following: (1) Assessment and collection of all national and internal revenue taxes, fees and charges; (2) Enforcement of all forfeitures, penalties, and fines connected therewith; (3) Execution of judgments in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts; (4) Give effect to and administer the supervisory and police powers conferred to it by this Code or other laws. Clearly, the following powers are beyond the scope of the above enumeration and hence may not be exercised by the Bureau of Internal Revenue: (a) selection of the property to be taxed; (b) the determination of the purpose for which taxes shall be levied; (c) the fixing of the rate of taxation; and (d) the rules of taxation in general. cEATSI In brief, legislation is making the law while tax administration is giving effect to the law. It goes without saying then that the power of the BIR as implementing agency is limited only to tax assessment and tax collection, these being purely administrative matters. Republic Act No. 8240 being a proper exercise of legislative power, it is thus incumbent upon the appropriate government agency to implement it. In this regard, the implementing agency, the Bureau of Internal Revenue, steps in, whose powers include the following: the assessment and collection of taxes. Without doubt, We agree with the petitioner that the Secretary of Finance, upon recommendation of the Commissioner of Internal revenue has the authority to promulgate rules and regulations for the effective enforcement of the provisions of the Tax Code. However, with this authority comes the caveat that said regulations must not be contrary to law for a regulation promulgated on a wrong interpretation of the law or in contravention thereof cannot give rise to a vested right that can be invoked either by the taxpayer or the Government. Let us now proceed to examine whether or not, in issuing Revenue Regulation 17-99, the BIR overstepped the limits of its authority and may be charged of having performed an administrative legislation. The controversy in the case at bar relates to the proper interpretation of Section 145 of the Comprehensive Tax Reform Program which is an amendatory provision of the previous Section 142 of the old 1977 Tax Code. The pertinent provision reads: "The excise tax from any brand of cigarettes within the next three (3) years from the effectivity of RA 8240 shall not be lower than the tax, which is due from each brand on October 1, 1996. Provided, however, that in cases where the excise tax rates imposed in paragraphs (1) (2) (3) and (4) hereinabove will result in an increase in the excise tax of more than 70%, for a brand of cigarette, the increase shall take effect in two tranches: 50% of the increase shall be effective in 1997 and 100% of the increase shall be effective in 1998. aDcHIC xxx xxx xxx The rates of excise tax on cigars and cigarettes under paragraphs 1, 2, 3 and 4 hereof, shall be increased by 12% on January 1, 2000 ." (emphasis supplied) In the guise of implementation of the above-emphasized provision, the BIR issued Revenue Regulation 17-99 the disputed portion of which provides: "The new specific tax rate for any existing brand of cigars, cigarettes packed by machine, distilled spirits, wines and fermented liquor shall not be lower than the excise tax that is actually being paid prior to January 1, 2000." Pursuant to this provision, the BIR imposed the new excise tax rate on each cigarette packed by machine manufactured by respondent Fortune Tobacco, and the latter subsequently paid the same under protest, and thereafter filed for refund. The respondent vigorously fought for the nullification of the quoted provision of RR 17-99 and it was sustained by the public respondent Court of Tax Appeals, on the ground that the questioned regulation went beyond the ambit of RA 8240 and hence its passage amounted to an administrative legislation not allowed by the 1987 Constitution and contrary to the principle of non-delegation of legislative power. It is the respondent's as well as the CTA's stand that the provision of RA 8240 in controversy merely mandates that the three-year transition period within which it is to be operative, starting from January 1, 1997 the date when the law took effect, expired on December 31, 1999. During the said period, the tax shall not be lower than the tax imposed for each brand on October 1, 1996. In other words, the respondent would like to impress upon the court that the 12% increase adverted to in RA 8240 should not use as base the rate imposed at the end of the transition period. Rather, the provision should be interpreted to mean that at the end of the transition period, an increase in the excise tax rate should have reached 12% than that imposed under the old ad valorem tax scheme. The BIR disagrees, explaining that the purpose behind the passage of RA 8240, as seen from the deliberations of the distinguished members of the Senate of the Philippines, is precisely to generate revenue so that the government expects to earn its target revenue of six billion pesos. We do not agree. Embedded in our jurisprudence is the rule that courts may not construe a statute that is free from doubt. Where a law is clear and unambiguous, it must be taken to mean exactly what it says, and courts have no choice but to see to it that the mandate is obeyed ( Quisumbing vs. Manila Electric Company, 380 SCRA 195 ). It is a fundamental rule in statutory construction that when the law speaks in clear and categorical language, there is no room for interpretation, vacillation or equivocation there is only room for application ( Cooperative Development Authority vs. Dolefil Agrarian Reform Beneficiaries Cooperative, Inc., 382 SCRA 552 ). Stated otherwise, if a statute is clear, plain and free from any ambiguity, it must be given its literal meaning and applied without attempt at an interpretation. The path which the respondent would like Us to follow is the application of the exception rather than the general rule above-cited that the spirit or the intention of the law should prevail over its letter. The rule, however, being an exception, applies only when an ambiguity is found in the law. Where the law is free and clear from ambiguity, the letter of it is not to be disregarded on the pretext of pursuing its spirit. The better rule is thus the meaning and intention of the law-making body must be sought, first of all, in the words of the statute itself, read and considered in their natural, ordinary, commonly-accepted and most obvious significations, according to good and approved usage and without resorting to forced or subtle construction. Courts, therefore, cannot presume that the law-making body does not know the meaning of words and the rules of grammar. Consequently, the grammatical reading of a statute must be presumed to yield to its correct sense. The disputed provision of Revenue Regulation No. 17-99 has the inevitable effect of increasing the tax rate fixed by Republic Act No. 8240, because it makes as basis the rate imposed at the end of the three-year transition period when the shift from the former ad valorem tax scheme to the specific tax scheme is to be undertaken, to wit: The new specific tax rate for any existing brand of cigars, cigarettes packed by machine, distilled spirits, wines and fermented liquor shall not be lower than the excise tax that is actually being paid prior to January 1, 2000." AcEIHC This is not the situation contemplated by Republic Act No. 8240, now Section 145 of the National Internal Revenue Code: "The excise tax from any brand of cigarettes within the next three (3) years from the effectivity of RA 8240 shall not be lower than the tax, which is due from each brand on October 1, 1996. Provided, however, that in cases where the excise tax rates imposed in paragraphs (1) (2) (3) and (4) hereinabove will result in an increase in the excise tax of more than 70%, for a brand of cigarette, the increase shall take effect in two tranches: 50% of the increase shall be effective in 1997 and 100% of the increase shall be effective in 1998. xxx xxx xxx The rates of excise tax on cigars and cigarettes under paragraphs 1, 2, 3 and 4 hereof, shall be increased by 12% on January 1, 2000 ." (emphasis supplied) It can be gleaned from the above-quoted provisions of Republic Act No. 8240 that the target of the government at the end of the three-year transition period is to effect a 12% tax rate increase using as tax base the figures provided in Section 145, subsection C, paragraphs (1), (2), (3) ad (4) of Republic 8424 otherwise known as the Tax Reform Act of 1997, in lieu of the tax rate being imposed prior to January 1, 2000, which is the rate imposed during the transition period of three years. At most, Section 145 of the Tax Code imports that the excise tax shall not be lower than the tax which is due from each brand on October 1, 1996, but which qualification is not present as to the increase by 12% on January 1, 2000 under paragraphs (1), (2), (3), and (4) of the said section. Petitioner however insists that the clear intent of the enactment of Republic Act 8240 is to increase the rates of excise tax on, among others, cigars and cigarettes, in order to collect more revenues in the process, going at great lengths to examine the congressional records and deliberations leading to the passage of Senate Bill No. 7198, now RA 8240, sponsored by Senator Enrile. It is conceded that Courts may avail themselves of the actual proceedings of the legislative body to assist in determining the construction of a statute of doubtful meaning ( Steel Mill, Inc. vs. Central Bank, 162 SCRA 628 ). They may resort to the legislative deliberations in the legislature on a bill which eventually was enacted into law to ascertain the meaning of its provisions. Thus, where there is doubt as to what a provision of a statute means, that meaning which was put to the provision during the legislative deliberation or discussion on the bill may be adopted ( De Villa vs. Court of Appeals, 195 SCRA 722 ). However, it ought to be pointed out as well that legislative deliberations may only be resorted to when there is a doubt as to what a statute means, not when it is clear and free of any ambiguity. Congressional deliberations are not considered as controlling where there is no doubt as to the meaning of the statute. As emphasized by the respondent in its Comment, the views expressed by the legislators during deliberations of a bill as to a bill's purpose, meaning, or effect are not controlling in the interpretation of the law ( Espino vs. Cleofe, 52 SCRA 92 ). For statements made by assemblymen during the floor deliberations do not necessarily reflect the views of the assembly. It is impossible to determine with authority what construction was put upon an act by the members of the legislative body that passed the bill, by resorting to the speeches of the members thereof. Those who did not speak may not have agreed with those who did; and those who spoke might differ with each other ( Manila Jockey Club, Inc. vs. Games and Amusement Board, 107 Phil 151 ). And even if the statements of those who spoke reflect the views of the assembly, if the act as passed is plain and clear, then it has to be given effect as thus enacted and not as the individual members considered it to be ( Legazpi vs. Executive Secretary, 68 SCRA 253 ). Accordingly, the opinions and views expressed by the legislators during floor deliberations of a bill may not be given weight at all in any of the following instances: where there are circumstances indicating a meaning of a statute other than that expressed by the legislators; where the views expressed were conflicting; where the intent deducible from such views is not clear; or where the statute involved is free from ambiguity ( Malayan Motors, Inc. vs. Commissioner of Internal Revenue, 111 Phil 524 ). AacCIT Thus, where a statute is clear and free from ambiguity, courts will not inquire into the motives which influence the legislature or individual members, in voting for its passage; nor indeed as to the intention of the draftsman, or the legislators, so far as it has not been expressed in the act. To read into the law the supposed intention of the legislators, where there is not ambiguity in it, would be to supply something that does appear in the act. Assuming, in argumento mentis , that RA 8240, from which petitioner derived its authority in implementing RR 17-99 is vague and ambiguous, and resort to the Senate deliberations in order to arrive at the meaning and intent of the law becomes a necessity, nonetheless, the petitioner misinterpreted the statements of the distinguished members of the Senate. Petitioner literally interpreted the phrase "to generate more revenues" as to mean that it is granted a blanket authority to fix or increase the rates of "sin products" under Republic Act 8240 which is tantamount to an unauthorized delegation of the legislative power to tax. We cannot agree with the petitioner's off-tangent interpretation of the intent of the law. From the deliberations in the floor of the senate, particularly the authorship speech of Senator Juan Ponce Enrile, it is clear that the focus was on the objectives that may be gained by adopting the excise tax scheme over the old ad valorem tax scheme adopted by the government. In other words, the target amount of revenue the government hopes to generate is to be achieved by the adoption of the excise tax scheme. It should be recalled that Republic Act 8240 merely amends Article 142 of the old code. In other words, in adopting the excise tax scheme, the legislature provided for a three-year transition period, and at the end thereof, in lieu of the said rate, the same shall be increased by 12%. It is therefore beyond cavil that Revenue Regulation 17-99 exceeded the provisions of Republic Act 8240 so that the CTA is correct in declaring its nullity. We are therefore more inclined to agree with the interpretation given by the Court of Tax Appeals, to wit: ". . . Adopting the argument of respondent and declaring the questioned regulation as valid would put to naught the provisions of Section 145 of the Tax Code of 1997, particularly the directive that, "the rates of excise tax on cigars and cigarettes under paragraphs (1), (2), (3) and (4) hereof shall be increased by twelve percent (12%) on January 1, 2000. This is in lieu of the tax rate being imposed prior to January 1, 2000. It is worthy to emphasize that with respect to the initial increase of excise tax from any brand of cigarettes within the next three (3) years from the effectivity of R.A. No. 8240, Section 145 clearly provides that the excise tax shall not be lower than the tax, which is due from each brand on October 1, 1996. Such qualification is wanting as to the increase by 12% on January 1, 2000 in the rates of excise tax on cigars and cigarettes under paragraphs (1), (2), (3), and (4) of the same section. Thus, the inevitable conclusion would be to impose the new rates of excise tax under paragraphs (1) to (4) which is to increase by 12%, even if it may be lower than the amount of tax being paid prior to January 1, 2000." Thus, in foreseeing an increase in the tax rate in consonance with the shift from ad valorem to specific tax, the legislature contemplated two periods: the transition period of three years fixing for the purpose the applicable tax rate; and the rate applicable after its expiration. At the end of the transition period which is 1999, the legislature meant that the rate to be applicable shall be that fixed under the last paragraph, which is the rate provided under paragraphs (1), (2), (3) and (4), increased by twelve per cent (12%) in lieu of the rate fixed during the transition period. This is the only conclusion that may be reached when the said provision is read in harmony with first sentence of the disputed paragraph of Section 145 that " the excise tax from any brand of cigarettes within the next three (3) years from the effectivity of RA 8240 shall not be lower than the tax, which is due from each brand on October 1, 1996 ." This, to Our mind, is the intent of the legislature in enacting RA 8240. At this juncture, We reiterate the oft-repeated rule that administrative regulations must be in harmony with the provisions of the law. In case of discrepancy between the basic law which is Republic Act 8240 and Revenue Regulation 17-99, an implementing rule or regulation, the former prevails. Administrative agencies may not, in the guise of interpretation, enlarge the scope of a statute and include therein situations not provided nor intended by the lawmakers. An omission at the time of the enactment, whether careless or calculated, cannot be judicially supplied however after later wisdom may recommend the inclusion. They are not authorized to insert into the law what they think should be in it or to supply what they think the legislature would have supplied if its attention has been called to the same. They should not, by construction, revise even the most arbitrary and unfair action of the legislature, nor rewrite the law to conform with what they think should be the law. And where a provision of law limits its application to certain transactions, it cannot be extended to other transactions by interpretation. To do any of such things would be to do violence to the language of the law and to invade the legislative sphere ( Rolando N. Canet vs. Mayor Julieta A. Decena, G.R. No. 155344, January 20, 2004 ). cEASTa In the case at bar, Revenue Regulation No. 17-99 inserted into Republic Act 8240 a provision which is not there either in letter or in spirit. It created a clear inconsistency with the provision of Section 145 of the 1997 Tax Reform Act, as the said law did not contemplate the increase in tax rate as understood by the petitioner. Being tantamount to an act of administrative legislation, We agree with the CTA's conclusion that the assailed provision of Revenue Regulation 17-99, ought to be nullified. Secondly , it is an equally settled rule in taxation that a statute will not be construed as imposing tax unless it does so clearly, expressly, and unambiguously. A tax cannot be imposed without clear and express words for that purpose. Accordingly, the provisions of a taxing act are not to be extended by implication ( Marinduque Iron Mines Agents, Inc. vs. Municipality of Hinabangan, L-18924, June 30, 1964 ). In every case of doubt therefore, tax statutes are construed most strongly against the government and in favor of the citizen because burdens are not to be imposed beyond what the statutes expressly and clearly import ( Commissioner vs. Fireman's Fund Insurance Co., L-30644, March 9, 1987 ). As to the second issue raised by the petitioner that respondent's claim for refund is not fully substantiated, this is a factual issue that is better left to the determination of the public respondent. It has been a long standing policy and practice of the Court to respect the conclusions of quasi-judicial bodies like the Court of Tax Appeals. The Supreme Court has time and again declared that it will not set aside lightly the conclusions reached by the Court of Tax Appeals which, by the very nature of its function, is dedicated exclusively to the considerations of tax problems and has necessarily developed an expertise on the subject, unless there has been an abuse or improvident exercise of authority ( Sea-Land Services, Inc. vs. Court of Appeals, 357 SCRA 441 ). In fact, Circular 1-91 of the Supreme Court provides that the findings of fact of the court, commission, board, office or agency concerned, the Court of Tax Appeals in this case, when supported by substantial evidence, is final. This reiterates the well settled doctrine that "findings of facts of the Court of Tax Appeals are entitled to the highest respect and can only be disturbed on appeal if they are not supported by substantial evidence or there is a showing of gross error or grave abuse on the part of the Tax Court" ( Commissioner vs. Mitsubishi Metal Corp., et al., GR No. 54908 & 80041, January 22, 1990 ). In the case at bar, We see no reason to disturb the ruling of the Court of Tax Appeals. WHEREFORE, the foregoing premises considered, the instant petition is hereby DENIED, and the assailed decisions and resolutions of the Court of Tax Appeals, AFFIRMED. IcDESA SO ORDERED. Verzola and Arevalo-Zenarosa * , JJ ., concur. Footnotes * Vice J. Tijam .