Lovsted & Co., Inc. v. Commissioner of Internal Revenue

[CA-G.R. SP Nos. 19944-19952. January 27, 1993.] (C.T.A. Case No. * ) LOVSTED & CO., INC. , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE and THE COURT OF TAX APPEALS , respondents . D E C I S I O N GUINGONA , J p : We have before Us two Petitions for Review involving decisions rendered by the Court of Tax Appeals, which petitions were initially filed with the Honorable Supreme Court. The aforesaid petitions were transferred to this Court by way of referral by the Supreme Court. ON CA-G.R. SP NOS. 19944 to 19952 The Petition for Review relative to the aforecited cases concerns the decision of the Court of Tax Appeals, dated October 30, 1987, the dispositive portion of which decision reads as follows: WHEREFORE, petitions are hereby dismissed with costs against petitioner. (Decision, p. 12; Rollo , p. 35) ANTECEDENT FACTS This Court hereby adopts the following statements of facts contained in the challenged decision of the Court of Tax Appeals: Petitioner corporation organized and existing under Philippine laws had a number of importations consisting of refrigeration equipment and parts for resale. In addition to the other import liabilities, these shipments were subjected to the payment of 25% advance sales tax inclusive of the corresponding 50% mark-up pursuant to Section 196(i) and (m) in relation to Section 193(b), all of the Tax Code, in effecting withdrawal thereof from Customs' custody. The full payment nevertheless, petitioner took exception by asserting that the rate of only 10% advance sales tax inclusive of the 25% mark-up prescribed in Section 199 in relation with Section 193(b), both of the Tax Code of 1977 should have been levied. Claims for the refund of the alleged excess payments of percentage taxes were accordingly filed but the resolution thereof by the respondent Commissioner of Internal Revenue remains pending to date. Hence the filing of these petitions for review in accordance with the provision of Section 292 of the Tax Code . . . xxx xxx xxx In assailing the assessment and payment of the additional advance sales taxes on the entered shipments of refrigeration equipment and parts, petitioner contends that the articles are of the industrial or commercial type and not among those enumerated in Section 194, 195, 196, 197, 198 and 201 of the Tax Code, as amended, hence, classifiable as "other articles" under Section 199 of the same Code and subject to only 10% advance sales tax, inclusive of 25% mark-up, which reads: Sec. 199(a). Percentage tax on sales of other articles . There shall be levied, assessed and collected once only on every original sale, barter, exchange, and similar transaction either for nominal or valuable consideration, intended to transfer ownership of, or title to, the articles not covered in Sections 194, 195, 196, 197, 198 and 201, a tax equivalent to ten per centum (10%) of the gross selling price or gross value in money of the articles sold, bartered, exchanged, or transferred, such tax to be paid by the manufacturer or producer; . . . Petitioner further stresses that, "assuming, arguendo , that the imported articles are analogous or similar to food and beverage storage cabinets mentioned in paragraph (i), Section 196, Tax Code of 1977, the law further mandates that an enumeration or listing of analogous or similar to 'those enumerated above' must first be recommended by the Commissioner of Internal Revenue to the Secretary of Finance for determination or approval, which was not done in the case at bar. It says: 'Similar or analogous articles to those enumerated above as determined by the Minister of Finance upon recommendation of the Commissioner of Internal Revenue based on the inherent essentiality of the product.' (Sec. 196 (m) emphasis supplied)." The respondent Commissioner of Internal Revenue did impose the percentage taxes at the rate prescribed in Section 196 in relation with Section 193(b), of the Tax Code of the Tax Code of 1977, infra , based on the findings that the imported refrigeration equipment are actually coolers/refrigerators to be used for storing and cooling food. In other words, they are similar or analogous to food and beverage storage cabinets operated by electricity. So that while subject importations are not among those enumerated in Section 196(i) of the Tax Code, they are similar or analogous to the articles enumerated therein, which are subject to advance sales tax at the rate of 25% inclusive of the 50% mark-up. Section 196 insofar as pertinent provides: Sec. 196. Percentage tax on sales of semi-essential articles . There shall be levied, assessed and collected on every original sale, barter, exchange, or similar transaction intended to transfer ownership of, or title to, the articles hereinbelow enumerated, a tax equivalent to twenty-five per centum of the gross selling price or gross value in money of the articles sold, bartered, exchanged or transferred, such tax to be paid by the manufacturer or producer; xxx xxx xxx (i) Beverage coolers, ice cream cabinets, water coolers, food and beverage storage cabinets, ice-making machines, and mild cooler cabinets, each having or being primarily designated for use with a mechanical refrigerating unit operated by electricity, gas, kerosene, or other means; xxx xxx xxx (m) Similar or analogous articles to those enumerated above as determined by the Ministry of Finance upon recommendation of the Commissioner of Internal Revenue based on the inherent essentiality of the product. (CTA Decision, pp. 1-2, 4-7) Petitioner Lovsted & Co., Inc. has submitted for the consideration of this Court the following "Reasons for Warranting Review": The issues involved in the cases under review are: a) Whether or not the imported refrigeration machines and/or parts imported by herein petitioner are industrial and/or commercial. If so, are these similar or analogous to articles or items mentioned in paragraph (1) of Section 196 of the Tax Code of 1977, as amended? b) Are commercial and/or industrial refrigeration equipment among those enumerated in Section 194, 195, 196, 197, 198 and 201 of the Tax Code, as amended. If in the negative, what is the correct tax rates for the same? Respondent Court of Tax Appeals dismissed the aforementioned cases in disregard of the law and the clear and unrefuted evidence presented by petitioner. (Petition for Review, pp. 8-9). The petitioner has invited attention of this Court to the fact that, during the trial of the instant cases, it had "adapted and offered the testimonial and documentary evidence presented during the trial of C.T.A. No. 3065 which respondent appealed and is docketed as G.R. No. 69944", which case will be reviewed by Us hereunder after reviewing G.R. Nos. 19944 to 19952. The petitioner has broken down its Argument in the cases at bar into three, to wit: (a) Refrigeration machinery and/or parts imported by herein petitioner are industrial and/or commercial. These machinery/units are not similar or analogous to articles or items mentioned in paragraphs (i) of Section 196 of the Tax Code of 1977, as amended. (Petition for Review, p. 9); (b) Commercial and/or industrial refrigeration equipment are not among those enumerated in Sections 194, 195, 196, 197, 198 and 201 of the Tax Code, as amended. The correct tax rates should be 10% advance sales tax and 25% mark-up as provided for in Section 199 in relation with 193(b) of the Tax Code, as amended. (Petition for Review, p. 14); (c) Respondents misinterpreted/misapplied Section 196 (m) of the Tax Code, as amended. (Petition for Review, p. 17) As to the first argument Apropos the first argument, the petitioner posits thus: Petitioner, in order to put to rest the question as to what kind or type of refrigeration equipment/units were imported and taxed by respondent at a higher rate, presented Mr. Alfredo Pangilinan, a Mechanical Engineer and who has had "almost ten years" of experience with refrigeration equipments with Philippine Appliance Corporation and Edward J. Niel and Co., and at that time was the Project Manager for the Industrial Refrigeration Department of Lovsted & Co., Inc. (Exh. "H", p. 13 & 14, TSN, 10/9/81). His testimony is as follows: "Q Mr. Pangilinan, I am presenting to you this document which is an Authority to Release Imported Goods No. IT-790000066 . . . . There are enumerations of various units of machineries . . . . Will you please tell us if this for a household refrigeration or for industrial or commercial refrigerations? (Exh. "H", p. 23, TSN 10/9/81) . . . ." A This is actually for commercial applications . . . . ." (Exh. "H", p. 24, TSN, 10/9/81, emphasis supplied). This fact of the subject being a commercial refrigeration equipment/unit was made, in effect, more clear and established during the cross examination of petitioner's witness by respondent. Q You likewise testified that the importation which is the present subject of the instant case are of commercial type of unit . I understand that this type of refrigeration machinery is installed as or small walking cold storage for food. A Correct. Q The purpose of this, I understand, is to keep the food and other food items cold and frozen? A Yes. Q So we can now claim that this commercial refrigeration machinery is used by the end user for the purpose of keeping the food and other food items frozen and cold ? A Yes. (Exh. "I", p. 4, TSN, 12/3/81, emphasis supplied) xxx xxx xxx ". . . Food and beverage storage cabinets", are already finished products which are used for cooling and/or storing food or liquid drinks (beverage) while the latter are not yet finished products but for use in the manufacture of commercial refrigeration equipment. A minimum stretch of imagination and an actual look-see of a food and beverage storage cabinet and that of the finished or manufactured commercial refrigeration equipment will conclusively show that these two are greatly different both in form and use (Exh. "J", C.T.A. 3065, Brochure p. 49, BIR Records). In fact, household refrigerators, freezers and/or coolers, which are nearest to the category in form and use are vastly different from a commercial refrigeration equipment. This difference was amply clarified by Engr. Pangilinan and by Exh. "I", and "I-2", C.T.A. 3065, and now as Exh. "F". (Affidavit of witness)". Q In this affidavit there is a caption of "Basic Difference Between Commercial Refrigeration Equipment and Household Freezer/Refrigerator/Cooler. Are there . . .? A Yes. Q Will you please read the difference of what is stated here . . .? A Well, a household refrigeration unit is self-contained wherein you can just plug it on. It is completely built. The ranges of horsepower is between 1/6 to 1/4. The condensers are firmed serpentine coil without any fans. There is no receiver and the evaporators are printed plates with bare pipe coil. . . .. xxx xxx xxx A . . . They are portable. They do not need maintenance people and they are mostly single phase unit; and they are generally cabinet type package. Q How about this one? A The commercial type units are the one you can see in the supermarkets, hotels, restaurants. Example of these are display cases where you can see in the supermarkets. . . . Actually, you can go inside the room. . . . . The type of unit is split type. Actually they are not pre-assembled. . . . A Yes, they are installed on sight. The ranges of horsepower is 1/3 horsepower to 100. The condensers are finned coil with fan motors or with air-cooled or water cooled. They have liquid receivers . . . . finned coil with fan motors. The expansion valves are thermally actuated. The units are fixed and cannot be transferred or moved. Mostly, they are three-phase-voltage requirement. The operators are required . . .." (Exh. "H", p. 17-19, TSN, October 9, 1981, emphasis supplied) On cross-examination by respondent, Mr. Pangilinan further elaborated on the above-mentioned differences Q Mr. Pangilinan, in the previous hearing you tried to differentiate the different types of refrigeration units. Could you possibly describe to us how this refrigeration machine looks like? A Usually the household type is something like cabinet wherein you could store food while those in commercial types they are like chiller room. You can enter the room. They are the display cases . . . Q The purpose of this, I understand is to keep the food and other items cold and frozen? A Yes. (Exh. "I", p. 3-4, TSN, 12/3/81; emphasis supplied) From the foregoing evidence which has not been rebutted by respondent it is conclusively clear that "food and beverage storage cabinets" are not similar or analogous to commercial refrigeration equipment/units basically in form, size or volume of contents and how it is made and maintained. Food and beverage cabinets are primarily those cooler cabinets we see in small tiendas or restaurants where softdrinks or small volume of food products are stored and kept fresh or cold temporarily or for a short period. While commercial industrial refrigeration equipment are those found in big hotels and supermarkets and which are not in cabinet forms but mostly a chilled room in itself to keep food, agricultural, marine, and/or dairy products (meat) cold and frozen for a very much longer period for sale to the public. The former are used for household purposes and are movable or portable while the latter is for commercial use and are fixed and cannot be moved and, as already stated to keep food and agricultural or marine products not only cold but frozen. The evidence is clear and unrefuted by respondent commissioner that industrial and/or commercial refrigeration equipments keep items cold and frozen. (Petition for Review, pp. 9-13) This particular argument is predicated on the petitioner's expressed belief that the articles it had imported (and for which it is being made to pay a 25% advance sales tax inclusive of the corresponding 50% mark-up) are not semi-essential products but "ordinary" products and hence covered by Section 199 in relation to Section 193 (b) of the Tax Code. The said petitioner has conveniently described in most instances the subject imported articles with the general description of "industrial/commercial refrigeration equipment and/or parts" (see Petition, pp. 3-8). Using that description, it professes a marked distinction between such articles and those covered by the following provision of section 196 (i) and (m), which reads thus: (i) Beverage coolers, ice cream cabinets , water coolers, food and beverage storage cabinets, ice making machines , and mild cooler cabinets, each having, or being primarily designated for use with a mechanical refrigerating unit operated by electricity , gas, kerosene or other means; xxx xxx xxx (m) Similar or analogous articles to those enumerated above, as determined by the Secretary of Finance upon recommendation of the Commissioner of Internal Revenue based on the inherent essentiality of the product . (emphasis supplied) This Court notes that, as described in the challenged decision of the Court of Tax Appeals which descriptions are more specific and more accurate, three of the questioned impositions referred to the following item: (1) turbo ice-maker (CTA Case No. 3417); (2) industrial automatic ice plant (CTA Case No. 3565); and (3) automatic ice plant (CTA Case No. 3584). No matter what technical or fanciful descriptions the petitioner would choose to describe the three above-cited imported articles, they nevertheless are, in our view, at the least analogous to "ice-making machines" which is what is among those specifically provided in the above-quoted provisions of Section 196 (i) of the Tax Code. They are analogous in that their purpose would be ice-making which is what an ice plant is for. Even the "condensing unit refrigerating equipment" (described in CTA Case No. 3525) insofar as its function is to reduce gases or vapors into solid or ice (not liquid form) could also be considered in the same category as the three imported articles previously described. Be that as it may, even if We were to limit Ourselves strictly to a review of the alleged commercial/industrial refrigeration equipment and/or parts vis-a-vis the household articles (which petitioner claims to be "ordinary" articles), We still find the aforecited contention of the herein petitioner to be untenable. In the first place, the petitioner admits that the "household" articles may be used in "small tiendas or restaurants" (Petition, p. 13) which by any stretch of the imagination could not be equated with one's concept of household. Then again, the petitioner had not bothered to explain exactly what it meant by the description "commercial/industrial refrigeration equipment and/or parts". It however did, through the self-serving testimony of one Engr. Alfredo Pangilinan (who was then an employee of the petitioner), try to show what it believed to be the salient distinctions between its refrigeration equipment and the "household" items. The petitioner has submitted for the consideration of this Court a multiplicity of alleged salient distinctions relative to form, size, technical components, volume of contents and how made and maintained, including inter alia the following: (1) difference in horsepower required; (2) different condensers used; (3) need for receivers; (4) type of evaporators; (5) usual voltage requirement; (6) maintenance requirement. In this Court's view, the above-cited distinctions deserve scant consideration from Us for they are neither significant nor material. Hereunder are three other differences adduced by the petitioner which this Court would undertake to review: 1. Those in Sec. 196 (i) are already finished products while Lovsted's refrigeration equipments are not yet finished products (Petition, p. 11) whereas the "household articles are completely built; 2. Those in Sec. 196 (i) are smaller and are movable or portable while Lovsted's equipments are so big you can walk into them and are immovable because they are built into the user's premises (Petition, p. 13); 3. Those in Sec. 196 (i) only keep the products cold and fresh for a short period of time while Lovsted's equipments keep the products, not only cold, but frozen, and for a much longer period in time ( Ibid .). As earlier noted by this Court, there are articles imported by Lovsted which could at the least be considered to be analogous to the enumeration contained in Section 196 (i) of the Tax Code. Strictly speaking however it could be said that the aforementioned articles are not only analogous but are in fact included in the enumeration, specifically relative to "ice-making machines". The reason for this is that, in this Court's opinion, the determination as to whether an article is covered by Section 196 or Section 197 of the Tax Code or not (which means that then it would be categorized as "ordinary" under Section 199) rests on its essentiality. The essentiality of the articles specifically enumerated under Section 196 (i), as well as those analogous thereto pursuant to the provision of the "basket clause" expressed in Section 196 (m), is basically determined by the use of such articles by the consumer. In the case of refrigerating equipments their use or purpose is to preserve the products (such as agricultural, marine and/or dairy) by cooling or freezing the same. In specifying refrigerating units operated by electricity, the Tax Code makes no distinction as to whether the unit is commercial/industrial or household. This Court finds no justification in providing distinction where the law itself does not so provide. The fact that a refrigerating unit is commercial or industrial could reasonably be expected to affect the size thereof. But this Court rules that the size of a unit and its consequent portability is immaterial to the essence of the same. In fact, if a small unit is made subject to a 25% advance sales tax inclusive of the 50% mark-up, this Court sees no sense in imposing a lesser tax on a bigger unit, such as a walk-in chiller room, which has an analogous, if not the same, basic use as far as the end-user is concerned. Parenthetically, it is inaccurate, if not totally wrong, for the herein petitioner to aver that the so-called household refrigerating units are utilized to keep food products "fresh or cold temporarily" (Petition, p. 13). The mistake is established by the fact that the enumeration in Section 196 (i) includes not only ice-making machines but also ice cream cabinets. Ice cream, as everyone knows, is not only chilled but frozen. Petitioner Lovsted has attempted to support its assertion that its imported articles are entitled to exemption from the general rule as found in Sections 196 and 197 of the Tax Code by arguing as follows: They want to encourage the importation of this kind of refrigeration equipment/units because the Philippines is in its development stage of industrialization and these equipments, hand in hand with the government's program for the development of our local products, are a necessity for the preservation of large volumes of agricultural, marine, and/or dairy products either for local consumption or for exports which ultimately is progress for the nation . And herein respondent exists not to thwart progress but to encourage or be a partner to progress. (Petition, p. 16 emphasis supplied) This Court is far from being persuaded. Instead, We perceive the above-quoted argument as a last ditch effort on the part of the petitioner to support its insistence that its subject imported articles should only be subject to Section 199 of the Tax Code as "ordinary" rather than semi-essential articles. The trouble is that, by thus arguing, it only succeeded in controverting itself. For, how could the petitioner insist that its imported items are not semi-essential when they have categorically and unequivocably asserted that the same items are necessary for the preservation of food products and ultimately for this country's development? Besides, with the above-cited argument, the petitioner conveniently ignores the fact that there could well be, considering that We are talking of revenue measures, other purposes that that which the petitioner has sought to speculate upon such purpose for example as the need for the government to derive more income by plugging possible loopholes in the enumeration under Section 196 with the inclusion of the "basket clause" (concerning analogous articles) through the amendment effected by the passage of P.D. 1358 on April 21, 1978. This Court notes that no refrigeration equipment, big or small, portable or not, had been classified under a category other than semi-essential articles. Refrigeration equipments being classified as semi-essential articles, it follows that herein petitioner's equipments cannot fall under Section 199 of the Tax Code which covers "ordinary" articles. The said petitioner's equipments are definitely a type of refrigeration equipment operated by electricity. It may be noted that the only other mention of refrigerating equipments is found in Section 197 of the Tax Code which provides for household refrigerators. It is significant that under Section 197 such household refrigerators when imported (such as are the subject articles of petitioner) are imposed exactly the same tax as imposed under Section 196, to wit: 25% advance sales tax inclusive of a 50% mark-up. It is ineluctable that the refrigeration equipments enumerated under Section 196 (i) of the Tax Code have one common denominator. They all have a mechanical refrigerating unit operated by electricity, gas etc. Lovsted's equipments are definitely equipped with such a refrigerating unit. As aptly manifested by public respondent Commissioner of Internal Revenue, Admittedly, in this case, the imported articles, which are for resale in the Philippines are electricity-operated refrigerating machinery installed as small walk-in cold storage for food which is the same as refrigerated show cases . Likewise, the description and uses of the imported refrigeration machinery show that the so-called "small walk-in cold storage" for food is actually a cooler/refrigerator to be used for storing and cooling food items. (Comment, p. 7: Rollo , p. 57) As earlier stated, this Court's main concern in the resolution of the issue whether the subject imported articles should be taxed under Section 196 or Section 199 of the Tax Code is to determine the essentiality of such articles. By applying the aforecited criterion of essentiality and on the basis of this Court's disquisition ( supra ), the alleged salient distinctions or differences between the petitioner's imported refrigerating equipments and/or parts and the so-called household refrigerating equipments pale into insignificance. By contending that its imported articles should be taxed under Section 199 of the Tax Code, the herein petitioner in effect is claiming exemption from the imposition of the tax due under Section 196. It is established rule of course that exemptions from taxation are to be construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority. Tax exemption cannot be extended by implication. It is highly disfavored and he who seeks the same must justify his claim by the clearest statutory grant. As held in Floro Cement Corporation vs. Gorospe , 200 SCRA 480, 481: On the exemption claimed by petitioner, this Court has laid down the rule that as the power of taxation is a high prerogative of sovereignty, the relinquishment is never presumed and any reduction or diminution thereof with respect to its mode or its rate, must be strictly construed, and the same must be coached in clear and unmistakable terms in order that it may be applied. More specifically stated, the general rule is that any claim for exemption from the tax statute should be strictly construed against the taxpayer (Luzon Stevedoring Corporation vs. Court of Appeals, 163 SCRA 647 [1988]). As to the second ground This second ground is nothing but a rehash or a reiteration of the first ground which avers in effect that the petitioner's imported refrigerating equipments, not being analogous to the items enumerated under Section 196 (i) of the Tax Code nor in Section 197 thereof, the same must therefore be taxed under Section 199 in relation with Section 193 (b) of the same Code. If so, the "correct" tax should be 10% advance sales tax and 25% mark-up. This Court finds no need to discuss this particular ground in detail having already done so in Our review of the first ground. Under this ground, the petitioner has attempted to indulge in a bit of history of the Tax Code. It is while doing so that petitioner had come up with the disastrous and manifestly contradictory averment that its imported article are necessary during the development stage of the Philippines. In almost the same breath, it asserts that the same equipments are mere ordinary articles and not semi-essential. On the matter of history, if We go back a bit further, it may be noted that under the 1939 Tax Code, with reference to refrigerators, all imported refrigeration appliances were subject to a uniform tax of 30% without any distinction as to whether they are finished or unfinished products (Alejandro, The Law on Taxation, '66 ed., p. 526). Under the present Tax Code, this Court sees nothing in the concept of semi-essential articles that will bring unfinished products outside its scope. There is nothing in the essential nature of the products enumerated under Section 196 (i) of the Tax Code that would require them to be finished products. As to the third ground In this regard, the petitioner posits as follows: There is no quarrel as to the fact that the aforequoted Sec. 196 (m) of the Tax Code, as amended, includes "similar or analogous articles to those enumerated above. However, it must also admit that the provision further states "as determined by the Minister of Finance upon recommendation of the Commissioner of Internal Revenue based on the inherent essentiality of the products." (emphasis supplied) From the aforequoted provisions, petitioner Commissioner of Internal Revenue cannot directly rule or determine that certain imported articles are similar or analogous to those enumerated in Section 196 of the Tax Code, as amended. It must submit or recommend those considered similar or analogous to the Ministry of Finance for determination and approval. This requirement of law was not followed or adhered to by petitioner in the case at bar. An example of compliance of this requisite is Ministry of Finance Department Order No. 17-78 which classified or listed additional articles to be subject to the rates provided for in Sec. 196 and 197 of the Tax Code, as amended (p. 154 & 517 of the NLRC, annotated by Jose N. Nollado, 1982 Tenth, Revised and Enlarged Edition). (Petition, p. 17.) Aside from the presumption that official duty has been regularly performed, it is of course a well-settled jurisprudential rule that all presumptions are in favor of the Commissioner of Internal Revenue's assessment and against the taxpayer; it is incumbent upon such taxpayer to prove the contrary (Commissioner of Internal Revenue vs. Antonio Tuason, Inc., 173 SCRA 397 citing Mindanao Bus Company vs. Commissioner of Internal Revenue, 1 SCRA 538). This Court notes the following provision of Section 326 concerning the power of the Commissioner of Internal Revenue to make rulings or opinions in connection with the implementation of internal revenue laws: The Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, shall promulgate all needful rules and regulations for the effective enforcement of the provisions of this Code. The authority of the Secretary of Finance to determine articles similar or analogous to those subject to a rate of sales tax under a certain category enumerated in Sections 194, 196 and 197 of this Code shall be without prejudice to the power of the Commissioner of Internal Revenue to make rulings or opinions in connection with the implementation of the provisions of internal revenue laws, including rulings on the classification of articles for sales tax and similar purposes. (emphasis supplied) In attempting to construe the provision of Section 196 (m) of the Tax Code, it would not do for the petitioner to simply focus on the said provision and totally ignoring other pertinent provisions of the same Code. It is a basic rule of statutory construction that a statute should be construed as a whole. Injustum est, nisi tota lege inspecta, de una aliqua ejus particula proposita indicare vel respondered (It is unjust to decide or to respond as to any particular part of the law without examining the whole of the law). The authority of the Secretary of Finance to promulgate rules and regulations is one thing while the power of the Commissioner of Internal Revenue to make rulings or opinions is another. It is clearly stated in the law that the Secretary's authority shall be "without prejudice" to the power of the Commissioner to make rulings or opinions, which he would have to make on a day-to-day basis as the need arises and/or as the problem or issue surfaces itself. This Court finds no incompatibility between the provision of Section 196(m) with the provision of Section 326 of the Tax Code. The two grants of authority/power could be exercised concurrently or simultaneously. One will not cancel the other; they can stand together. This is especially so if We take into account that a contrary view would unduly emasculate the power granted to the Commissioner of Internal Revenue to make rulings or opinions in addition to the authority of the Secretary of Finance to promulgate rules and regulations. It would indubitably have serious adverse impact on the revenue collection efforts of the government with which the Commissioner is primarily tasked to attend to. It is presumed that the legislature intends to impart to its enactments such a meaning as will render them operative and effective, and the courts are called upon to construe them as to carry out these objects. To accept the self-serving and unduly restrictive view of the petitioner in this regard would be to violate the afore-mentioned presumption against ineffectiveness of legislation. PREMISES CONSIDERED, the instant petition for review by petitioner Lovsted relative to C.T.A. Cases Nos. 3417, 3480, 3484, 3512, 3525, 3565, 3584, 3633 and 3670 (which petition for review is docketed in this Court as CA-G.R. SP Nos. 19944 to 19952) is hereby DISMISSED. On CA-G.R. SP NO. 19943 This case involves the same refrigerating equipments and/or parts, the same issues and the same parties (except that in the instant case, the petitioner is the Commissioner of Internal Revenue while in the previous cases reviewed by Us the petitioner is Lovsted & Co., Inc. In both, the public respondent is the Court of Tax Appeals). The only marked distinction between this case and the previous cases is that whereas the Court of Tax Appeals ruled in favor of the Commissioner of Internal Revenue (Anent CA G.R. SP Nos. 19944 to 19952), the same Court ruled against the said Commissioner in the instant case (CA G.R. SP 19943). In its decision concerning the case at bar, the following is what the Court of Tax Appeals had to say: It (Lovsted) steadfastly clung to its belief that the questioned merchandise should be subject only to the lower rate of 10% advance sales tax and 25% mark-up, and it called respondent's attention to an earlier ruling dated August 9, 1973 of the then Commissioner of Internal Revenue Misael P. Vera (Exh. "K", p. 54, CTA rec., emphasis supplied.) quoted hereunder: August 9, 1973 Mr. D. A. Montelibano Executive Vice-President Smith, Bell & Company, Inc. P.O. Box 311, Manila Sir : This refers to your letter dated August 8, 1973, requesting confirmation that the importations of your corporations, namely: Commins Diesel Sales and Service Corporation of the Philippines; Smith, Bell & Company, Inc.; and G.M. Lovsted & Co. (Phil.), Inc. of Frigiking Carrier-Transicold, Krack, J & E Hall, Copeland, Sporland and Penn Industrial refrigeration equipment and parts and accessories thereof are subject only to the 7% advance sales tax. It is stated in your letter that the imported industrial refrigeration equipment are for installation in built-in truck refrigeration units, concrete warehouses, insulated containers and boxes or insulated ships' holds of your clients who are engaged in shrimp, and fish processing for export, frozen food manufacturers, frozen chicken producers, supermarket cold storage, fishing boats, etc . In reply, I have the honor to inform you that considering the foregoing nature and uses of the industrial refrigerators imported by your above-named corporations and our appreciation of the brochures submitted, said importations of industrial refrigerators together with parts and accessories thereof by your aforenamed corporations are subject to the 7% advance sales tax based on the landed cost thereof plus 25% mark-up, pursuant to Section 183 (b) in relation to Section 186, both of the Tax Code. Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue TAN 1601-593-5 xxx xxx xxx In recapitulation, the Court may now safely conclude that respondent's position that Section 196 (i) and (m) correctly apply to the products in controversy is erroneous. We are in no position, or without justifiable reason, to depart from the ruling dated August 9, 1973, (Exh. "K", supra ) of the then Commissioner of Internal Revenue Misael P. Vera that said articles are subject to the lower rate of 10% advance sales tax (then only 7% advance sales tax), plus 25% mark-up. The payment of the 25% advance sales tax plus 50% mark-up in the sum of P36,086.00 is erroneous and, therefore, refundable to petitioner Lovsted & Co., Inc. (C.T.A. Decision, pp. 4-5, 9-10: Rollo of CA-G.R. SP NO. 19943, pp. 28-29, 33-34) This Court finds merit in the following manifestation of petitioner Commissioner of Internal Revenue: It will be noted that the proviso "similar or analogous article to those enumerated above" now found in Section 196 (m), supra , was then not incorporated in the law. It was for this reason that although the importation was similar or analogous to "food and beverage storage cabinet" the ruling of August 9, 1973, classified subject importation within the coverage of Section 186 (now Sec. 199) of the Tax Code, i.e. subject to 10% advance sales, plus 25% mark-up. However, P.D. 1358, dated April 21, 1978, amended, among others, Section 185-A (now Sec. 196), of the Tax Code, inserting paragraph (m) which for emphasis, we quote again: "(m) Similar or analogous article to those enumerated above as determined by the Ministry of Finance upon recommendation of the Commissioner of Internal Revenue based on the inherent essentiality of the product." Clearly, one of the salient features of the amendments to the Tax Code by P.D. 1358, is the inclusion of the phrase "similar or analogous article" in the provision dealing on classification of articles subject to different rates of sales tax. As such, the enumeration of articles under Section 196 of the Tax Code, is not inclusive. Paragraph (m) of Section 196 of the Tax Code, authorizes the Commissioner of Internal Revenue to classify a particular product, as similar or analogous to the articles mentioned in the said provision. The Ministry of Finance issued the ruling dated March 29, 1979, classifying subject importations as similar or analogous to the articles under Section 196 (i) of the Tax Code, particularly "food and beverage storage cabinet" pursuant to the authority granted him under paragraph (m) of Section 196. "Construction by an executive branch of government of a particular law although not binding upon courts must be given weight as the construction comes from the branch of the government called upon to implement the law." (Salaria vs. Buenviaje, 81 SCRA 722 cited in La Suerte Cigar & Cigarette Factory et al. vs. C.T.A., et al. and Alhambra Industries, Inc., et al. vs. C.T.A. et al G.R. Nos. L-36130 and L-36131, January 17, 1985). Thus, respondent Court erred in finding that "through the years from 1973, when the first ruling on the applicable tax rate to the questioned merchandise came out, to the present, the taxing authority has not, in the least, bothered to make a positive change in the rate of tax applicable to the goods in question," and in concluding that there is no "justifiable reason, to depart from the ruling dated August 9, 1973, of the then Commissioner of Internal Revenue Misael P. Vera that said articles are subject to the lower rate of 10% advance sales tax, plus 25% mark-up." (Petition for Review originally filed with the Supreme Court, pp. 10-12: Rollo of CA-G.R. SP No. 19943, pp. 18-20) PREMISES CONSIDERED, the instant petition for review (CA-G.R. SP No. 19943) is given due course. The challenged decision of the Court of Tax Appeals is hereby REVERSED. SO ORDERED. Chua and Galvez, JJ ., concur. Footnotes * C.T.A. Case No. 3417-3480, 3484, 3512, 3525, 3665, 3584, 3633 & 3670; Reversed in C.T.A. Case No. 3065