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PHILIPPINE SUPREME COURT DECISIONS

EN BANC

[G.R. No. L-18354. March 31, 1964.]

CHENG BAN YEK CO., INC., Petitioner, v. AUDITOR GENERAL, Respondent.

Rafael Dinglasan for Petitioner.

Solicitor General for Respondent.


R E S O L U T I O N *


BAUTISTA ANGELO, J.:


Petitioner moves this Court to reconsider its decision rendered on December 29, 1962 wherein it held that the cottonseed oil it imported in the years 1953-1955 for use in the manufacture of lard from coconut oil is a component and not a stabilizer and, therefore, is subject to the 17% special excise tax. In support of its motion, petitioner submitted Annexes A, B, B-1, and B-2.

On February 12, 1963, respondent was required to comment on the motion for reconsideration. Respondent submitted his comment on February 28, 1963 and therein he prayed that the motion be denied for lack of merit. He reiterated the arguments already advanced in his original brief.

In the meantime, petitioner prayed that Annexes A, A-1 to A-3, which are photostatic copies of pertinent pages of Alton E. Bailey’s book "Industrial Oil and Fat Products" be submitted as parts of his motion for reconsideration and, in its reply to respondent’s comment, it also attached certain annexes representing photostatic copies of pertinent pages of books and journals of some authorities to bolster up the arguments advanced therein in refutation of respondent’s comment.

During the oral argument held on April 24, 1963 on the motion for reconsideration, petitioner again asked for leave to submit certain documents which counsel marked as Exhibits AA, BB, X and Y, which petition was granted, and because said documents partake of the nature of new evidence which was submitted in the absence of respondent, the Court in its resolution of May 30, 1963 resolved to remand the case to respondent to give him an opportunity to examine and cross-examine the persons or officials who appear to be the authors or writers thereof and to take whatever action he may deem proper in the premises.

On December 13, 1963, respondent filed his compliance with this Court’s resolution and therein he quoted a memorandum submitted by Deputy Commissioner Flaviano M. Yenko of the National Institute of Science and Technology, which was concurred in by the Chairman of the National Science Development Board, wherein said official made a categorical statement that the views expressed by him as contained in the letter sent to petitioner’s counsel dated January 30, 1963 did not constitute a reversal of the previous opinion rendered by him on the matter under consideration.

The contents of said memorandum read as follows:jgc:chanrobles.com.ph

"We have your memorandum dated September 23, 1963 regarding a query from the Auditor General on the use of hydrogenated cottonseed oil.

"In this connection, please be informed that the views expressed by Mr. Charles Schuh and the undersigned which were endorsed by the Chairman in his letter to Atty. Dinglasan, dated January 30 do not constitute a reversal of the previous technical opinion rendered by this office that in the manufacture of vegetable lard, hydrogenated cottonseed oil serves as a component and not as a stabilizer.

"In the manufacture of vegetable lard, stearine (hydrogenated cottonseed oil) is added to the already stable liquid coconut oil in order to form plastic mixture and afterwards air is incorporated into this stearine-coconut oil mixture to improve its blending properties. From this point of view, stearine cannot be considered a stabilizer.

"While it is true that stearine forms with coconut oil a plastic mass that can keep the entrapped air, the stearine primarily serves to solidify or plasticize this liquid coconut oil, thereby forming a component part of the coconut-stearine plastic mixture.

"The stearine (hydrogenated cottonseed oil) therefore when used in the manufacture of shortening is to be considered as component and not a stabilizer."cralaw virtua1aw library

It should be noted that in said memorandum Commissioner Yenko merely states that the views expressed by him and Mr. Charles Schuh do not constitute a reversal of the previous opinion rendered by him that in the manufacture of vegetable lard hydrogenated cottonseed oil serves as a component and not as stabilizer, but does not refute nor comment on the views expressed by the authors mentioned in the new evidence submitted by petitioner. Some of those views follow:jgc:chanrobles.com.ph

"If an all-vegetable shortening is to be made with a minimum amount of hardened oil, the latter is usually hydrogenated to an iodine value of 15% or less. In the case of a shortening which is to be made entirely of cottonseed oil, about 10% to 15% of hardened oil or vegetable stearine is required in the mixture, the exact amount depending upon the iodine value and titer of the stearine.

"Coconut oil, as stated previously yields a shortening of rather poor plastic range. If coconut oil is to be used in a shortening in large proportions, the product is best made by blending unhydrogenated coconut oil with about 8% to 12% of vegetable stearine and as much cottonseed oil or rather liquid oil as may be permissible to use. Completely hydrogenated coconut oil has a melting point of but 110
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