June 30, 1975
Ponente: Esguerra, J.
FACTS
Wonder Mechanical Engineering Corp. was granted tax exemption privilege under R.A. 35 in respect to the “manufacture of machines for making cigarette papers, pails, washers, rivets, nails, candies, chairs, etc.”
Subsequently, the Commissioner assessed sales tax on gross sales of articles manufactured by the company, including steel chairs. Citing its tax exemption privilege, the company challenged the validity of said assessment.
RULING
The Court held for the CIR.
The company was granted tax exemption in the manufacture and sale of “machines for making cigarette paper, pails, etc.” but not for the manufacture and sale of articles produced by those machines.
The manufacture of steel chairs, jeep parts, and other articles not constituting machines for making certain products would not fall under the classification of “new and necessary” industries envisioned in the statutes.
Exemptions are highly disfavored in law and he who claims tax exemption must be able to justify his claim or right thereto by the clearest grant of organic or statute law. Tax exemption must be clearly expressed and cannot be established by implication.
