COMMISSIONER OF INTERNAL REVENUE and COMMISSIONER OF CUSTOMS, petitioners, vs. HON. APOLINARIO B. SANTOS, in his capacity as Presiding Judge of the Regional Trial Court, et al, respondents. G.R. No. 119252. August 18, 1997

G.R. No. 119252. August 18, 1997

COMMISSIONER OF INTERNAL REVENUE and COMMISSIONER OF CUSTOMS, petitioners,

vs. HON. APOLINARIO B. SANTOS, in his capacity as Presiding Judge of the Regional Trial Court, et al, respondents.

Facts:

Petitioner in this case, the Commissioner of Internal Revenue and the Commissioner of Customs jointly seek the reversal of the Decision of herein public respondent, Hon. Apolinario B. Santos, Presiding Judge of RTC Pasig City, declaring Section 150(a) of Executive Order No. 273 inoperative and without force and effect insofar as petitioners are concerned. This EO subjected jewelry to a 20% excise tax in addition to a 10% value-added tax under the old law.

Private respondent Guild of Philippine Jewelers, Inc., is an association of Filipino jewelers engaged in the manufacture of jewelries and allied undertakings, with private respondent Antonio M. Marco is the President of the Guild.

Some of the members of the Guild of Philippine Jewelers were given a Mission Order not to sell the jewelries and other articles displayed in their respective establishments until it can be proven that the necessary taxes thereon have been paid. In response, Private Respondent prayed that Regional Trial Court declare Sections 126, 127(a) and (b) and 150(a) of the National Internal Revenue Code and Hdg. No. 71.01, 71.02, 71.03, and 71.04, Chapter 71 of the Tariff and Customs Code of the Philippines unconstitutional and void, and that the Commissioner of Internal Revenue and Customs be prevented or enjoined from issuing mission orders and other orders of similar nature. It even submitted a position paper purporting to be an exhaustive study of the tax rates on jewelry prevailing in other Asian countries, in comparison to tax rates levied on the same in the Philippines.

Issue:

Can the Regional Trial Courts declare a law inoperative and without force and effect or otherwise unconstitutional?

Held:

No. This is a matter on which the RTC is not competent to rule. As Cooley observed: “Debatable questions are for the legislature to decide. The courts do not sit to resolve the merits of conflicting issues.” In Angara vs. Electoral Commission, Justice Laurel made it clear that “the judiciary does not pass upon questions of wisdom, justice or expediency of legislation.” And fittingly so, for in the exercise of judicial power, we are allowed only “to settle actual controversies involving rights which are legally demandable and enforceable,” and may not annul an act of the political departments simply because we feel it is unwise or impractical. This is not to say that Regional Trial Courts have no power whatsoever to declare a law unconstitutional. In J.M. Tuason and Co. v. Court of Appeals, we said that “[p]lainly the Constitution contemplates that the inferior courts should have jurisdiction in cases involving constitutionality of any treaty or law, for it speaks of appellate review of final judgments of inferior courts in cases where such constitutionality happens to be in issue.”

This authority of lower courts to decide questions of constitutionality in the first instance was reaffirmed in Ynot v. Intermediate Appellate Court. But this authority does not extend to deciding questions which pertain to legislative policy.

The trial court is not the proper forum for the ventilation of the issues raised by the private respondents. The arguments they presented focus on the wisdom of the provisions of law which they seek to nullify. Regional Trial Courts can only look into the validity of a provision, that is , whether or not it has been passed according to the procedures laid down by law, and thus cannot inquire as to the reasons for its existence. Granting arguendothat the private respondents may have provided convincing arguments why the jewelry industry in the Philippines should not be taxed as it is, it is to the legislature that they must resort to for relief, since with the legislature primarily lies the discretion to determine the nature (kind), object (purpose), extent (rate), coverage (subjects) and situs(place) of taxation. This Court cannot freely delve into those matters which, by constitutional fiat, rightly rest on legislative judgment.

As succinctly put in Lim vs. Pacquing: “Where a controversy may be settled on a platform other than one involving constitutional adjudication, the court should exercise becoming modesty and avoid the constitutional question.” As judges, we can only interpret and apply the law and, despite our doubts about its wisdom, cannot repeal or amend it.

The respondents presented an exhaustive study on the tax rates on jewelry levied by different Asian countries. This is meant to convince us that compared to other countries, the tax rates imposed on said industry in the Philippines is oppressive and confiscatory. This Court, however, cannot subscribe to the theory that the tax rates of other countries should be used as a yardstick in determining what may be the proper subjects of taxation in our own country. It should be pointed out that in imposing the aforementioned taxes and duties, the State, acting through the legislative and executive branches, is exercising its sovereign prerogative. It is inherent in the power to tax that the State be free to select the subjects of taxation, and it has been repeatedly held that “inequalities which result from a singling out of one particular class for taxation, or exemption, infringe no constitutional limitation.”