CTA Case No. 2930 (Decision)

� EPUBi.YC �tr Til\! P 11,. PPI COU T ��t: 1'.\ X A PPE~. ~UJ:;ZOIJI CIT . � /WI NTHROP -~TEA RNS , I NC. , Petit ione r , - .ve r s u"s C. T. A. CASE Oo 2930 COMMI SSIONER OF I NTERNAL REVENUE , Responden t � X- ~- .- .- .- .~ .- .- .- .X DE C s 0 N The basic que s tion f or us i n t h i s c ase is t he .� c orrect c lassi ficat ion , f or s a l e s tax pur pose s , of t he "Tussy Produc t s" o f peti t i one r, namely : (a ) . Tussy Lemon Hand and Body Lot i on (b) Tu s s y Hand and Body Lot i on (c ) Tu ss Lemon Moi stur izer , a nd (d ) Tussy Lemon Cleansing Cr e am. Pe t itione r W i n thr op-~ te arn s , I nc. con t ends ha t i t s � Tussy Produc t s w s hould be class i fi ed as meqi- c i nal pr eparat i ons s ubjec t t o t he 7% sales t ax pr es- cr i bed i n Sec t ion 186 of t he 1939 Nat iona l In te rna l Reve nue Code , whi l e r e s pondent Commi ss i one r of I nte r na l Revenue ave rs t ha t t he a r e to i le t a r t icles or pr epa ra t i ons wi t h i n t he purv i ew of Section 184 (b) o f the same Code su bj ect t o the 7 0% s a l es t ax pres- c ribed fuer e i ne Sec t i on 84 (b) of the Ta x Code r e ads a t t he t ime as f ollows � 14L

� OECISIO - CTA CASE NO . 2930 .2 �,. "SEC . 18 4. per c e n tage tax on sales� gf jewelry, t oilet preparations a nd others . - There s hall be evied , assessed ~ and c ollected once only on every or i gi nal sale , bar ter, ex c ange, or similar tr ansac i on o nominal or valuable considera t i on i ntended to tr ansfe r owne ship of , or t itle t o , t he articles here i n- . be ow enumera t ed a tax e quivale n t o s eventy pe r c en t um of t he gross va l ue in money of t he ar ticle so s old, bar - . t er ed, exchanged, tr ansferred , sue t ax to be pa id by the manufacturer or pr oducer : Provided , further , That , where the articles enumerated here i n- . below are manufactu red out o f ma te ial s subjec t to t ax under t his section , the to tal cost of such ma t erials , as du l y establ ished , shall be deducti bl e f rom the gross selling pr i ce or gr oss value i n mone y of such manufactur ed ar t icles. XXX XXX XXX (b ) Pe rfumes, essences, eyt{ac ts , toile t water s , c9smet iCS 9 petroleum j e llies , hair oils , pomades , ha ir dressings, ha ir restoratives , a ir dye s , a roma tic oachous , toile t powde r s , and any simi lar s ubs tance, a rtic l e , or pr e par a tions, by whatsoeve r name known or disting ui s hed, and any of the above .. which are used or applied or i ntended to be used or applied for toile t pur - poses, except tooth a nd mouth washes, dent i fices ; too th paste , and talcum or medicated t oile t powde rs . XXX XXX . XXX . II Paren thet ic a l l y, it may be stated t ha t ar t i cles not enume r ated i Sections 184 , 184- A, 185 , 185-A , 185-B and 186-B o f t he t hen in f orce Na t iona l I nter na l Revenue Code are c ons i der ed or din y ar ic l es 6 i nc l.udi n9 med icina l pre para ions , subJ ect to the~ 143 '�� : r, . -.

OECI SIO � ... .. CTA CASE NO. 2930 � This amount rep r esent s ' t he d if ference betwee t he 70% sal es t a0x under Sec tion l 84(b) and t he 7% s ales tax i mposed unde r Section 186 . It maybe stated that in a previ ous letter II .. dated Aug ust 9, 977 r espondent , in rep ly to pet itioner 's l etters of March 24 , 1976 a nd Novembe r 27 , 1975 r equesting f6r a r ul i ng t ha t he "Tuss Pr oducts" be categorized as "medic ina l prepa rat ions 00 subj ect t o t he 7% sale s t ax prescr ibed in Sect i on 186 of .� the Tax Code , i nstead of 70% sales t ax , ru led t hat even assumi ng that s aid products are medicated , neverthe less t hey r emain unde r t he class ifica t ion of � toi l e t articles or pr eparat ions" subjec t t o 70% sales t ax . Ta king responden~'� f ai lure to t ake c ategorica l action on its claim for r efund or t ax c r edit fi l ed on January 17 , 1978 as i mpl ied den i a l t hereof , a-s the prescriptive period of t wo yea rs pr ov ided f or in t he then Section 306 of the Tax Code for the i nstitution of t he j ud ici a l su i t f of t he recover y � of any national internal revenue t ax al leged to have bee n e rroneously or i ll~gally c o llec te d was about to expir e , petitioner initiated t he pre sent action with this Cour t on J anua r y 20 , 1978 praying t hat its � Tussy Products " be declared medici na l prepa ration s 14-5 � 0 �� ,.

DEC IS ON � CTA CASE NO . 2930 - .3 sales a of 7 ~ . Petitione is a domestic corporat ion duly o r gan i zed and ex i s ti ng unde r t he l aws of the Philipp ine s , with pr i ncipa business address af o . 74 Epifanio de os San tos Ave nue , Mandalu�ong , Metro Manila . It i engaged i n t he manufacture a nd sa le of pharmace utic al , medica ted , cosmetic and toilet products , among whic h are the Tus s y Lemon Hand and Body Lot i on , Tuss Hand and Body Lo tion, Tu ssy Lemon Moisturi zer and Tus s y Lemon Cle ansi ng Cream , r e ferr ed to as "Tussy Produc t s ". On t he sa l e o f t he a for esaid pro~ ucts iD r the period starting from the 4th quarter of 1975 up to t he 4th qua rter o f 1976 , petitioner made a t o tal gross sales amoun ting to Pl,9 75 , 979 . 00 , with ~ ne t ... s a l e s of P809 ,2 44 . 00 . On s a i d net sale s , pe t i tione r pa id s al e s t ax in the sum of P566,4 71 . 00 at t he J ra te of 7 0 ~ unde r Se ction 18 4 (b) pf th~ Tax CodeA Conte nd i ng t ha the "Tussy Products " a re med i cinal pr epa r a tions s ubjec t only, to t he 7% s a les t ax prescr i bed unde r Sec tion 186 , petitioner fil ed on J an uary 17 , 1978 with r e spondent a wr i tte n claim f or refund or t ax c redit of the amo unt o f P594 , 260.00 as over paid sa l e s t ax fo the pe ri od star t i ng the Jrd quar t er of 1975 t o the 4th quarte r of 1976 . 14�-4 ! . ' . ..

DEC ISIO - CTA CASE NO . 2930 � .5 - subject to 7 ~ sales t ax , and t hat respondent be ordered to 4 rant pet i i oner'~ cl a i m f or t ax cred it / or re f un of the s um o f PS09,825 . 00 The a lleg~d ove rpa id saies t ax for t he r d qua rter of 1 97 5 ~ was e xc l uded from petit i one r ' s. claim. The parties are no t in dispute a s to the c omputa tion of t he �sale s t ax paid by, or t he amoun t refundable to petitioner , as the c ase may I n assaili ng peti tione 8 ~ r ig ht t o the r efund or t ax credi t of t he amount o P509 , 825 . 00 , r es- pondent rai ses t he issue t hat the Tuss y Produc ts� are t oilet article s or prepar a tions within t he pur view of Sect ion 184(b) pf the theQ National Interna Revenue Code , fall ing unde r the ter~ �x x x and any similar substance , rticle or prepara tions, by whatsoever known name known o r . distinguished i x x x excep t t ooth and mouth was he s , dentr i f i ces , t oo t h pas t e ; a nd talc um or medicated t oilet powders" . As re sponden t puts it , a l l toi let articles or pr eparations, excep for powder, come within t he� pur view of Section l 84 (b) of the Tax Code and t he refore t axed under said sect i on r egard l ess of whet he r t hey a re med icated or not . Conseque nt y, e ve n a ssum ing t ha t peti- tioner ' ~ "Tus sy Pr od uc t s ~ are med ic a t ea , ne ve rt he 14 6 ~

DECIS ION CTA CASE 0 2 930 6- less they r emain unde r � t he c l ass i f i ca t i on of �toilet artie es or preparations �, subj ec t t o I the 70i sa es t ax r escr ibed i n Sec tion 184 . Apparently , peti tioner does not quarre l with . responden t t hat toile t articles o preparatio s ar e t he sub jects of taxation of Sec tion l 84 (b). And the l aw seems clea on t h i s matter . Section l 84(b) ?f t he Revenue Code e nume r ates the articles or preparati ons t hat are sub' ec t to t he tax unde r said section and adds to the l is t " a nd any simi ar substance , a rticle or preparations , by whatsoever known name known or distinguished# x x "., I t i s a settl ed rule of statutory const ruction that where genera l wor ds fo l ow an enumera tion of persons or things , by words of a particular and s pecific meaning , such general wor ds are not t o be construed in the ir widest exten t, but are to be held as app lying only t o persons or things of .the same general ~ind or class as those spec i fica lly men- tioned . This r ule ' s c ommonl y called t he "ejusdem qene ris " r ule . (Ollada vs. Court of Tax Appe als , 99 Ph i l. 604 .. ) The t erm "any simila r substance , article or prepar at i ons � s hou l d t erefore be r e s t i c ted to subst ances , articles o prepar ations s i milar or 1 4 '7 .,' I ��- - - - - - - -

� DECISION - CTA CASE NO. 293 0 - .7 - i de tic a l to "per fumes, e s sences , ex trac ts , t oi let wa ters , cosmetics pe trol e um jelly, hai r oils, I pomades, hair dres sings , hai r r es toratives, ha i~ dyes , aromat ic cachous, toilet powders " which ~for � practical purposes and i n ever y day life a r e t oilet articles or preparations as stated in t he ti tle of Section 184. Thi s is re nde r ed clearer by the use of the wor d "simila r before the t e rm " substance , ar t icle or preparations", and the provisi on "any of ~ the a bove which are used or appl ied or i ntended to be used or appl ied for toilet purpose s" whic h f ollows there after . Thi s brings us to the definition of the term "to ilet preparations". Jur i sprudence defines it as 'Any prepar ation wh ich i s int~ nde d t o aff ec t , and conceivably, to i mprove t he bodily appearance , such a s a lotion intended to con tribute to heal t h and appearance of skin" . (Peroxide Chemical Co . v. Sheehan , C.C~ Ae No. 1146 2 , 108 F 2d 306 , 308 .) From t h is , we c anno t but extract the view th at any prepar ations or substances which are used or appl ied , or i ntended to be used or applied , for t oilet pur- poses or f or any purposes fo r which the art icles enumer ated in Sec tion 184(b) sub ject to tax there- i n are c ustomar ily used, are considered toi let 14 H

' -. � / DECISION - CTA CASE NO . 2930 � .8 - pr eparations , rega rdles s of t he name by whi ch t he y are known or d istinguished . They a re c ommonly and / primar i ly adjunc ts to the dai l y toilet, i ntendeq to be used in c o nection wi th t he care of t he bod1 , or applied to affect and , c onceivably , to i mp r ove t he body appear ance . Are t he "Tu ssy Products " of petitioner to ile t ar t icles or pre parations within the pur v i ew of Section 184 (b) .of the Nat ional n te rnal Re venue Code ? The Food a nd Drug Admi ni str ation (now Burea u of ~� ood a nd Drugs ) ~ a fte r sever al ana l yse s a nd e xam- i nations of t he "Tussy Products", i s sued a c erti f i- cat ion dated November 20 , 1975 (Ex h ib it " D") .t hat : November 20 , 1975 TO WHOM IT MAY CONCERN: I n vi ew of t he medicinal c omponents pre sen t in t he f ollowing products manuf - ac tu red in t he Phi lippines by Wi nthrop- Stearns , I nc., Mandaluyong , Riz a l for Valmon t Inc. , New Yor k , U. S . A. : TUSSY Hand a nd Body Lo tion with Vitamin A TUSSY Lemon Hand and Body Lotion wi t h Vi t . A TUSSY Cleansing Cre am with Borax TUSSY Lemon Mois turizer with Vitami n A the preparations are used in the treatme11t and prevent ion of s kin problems and f or medicated skin cleansing and to nutri f y sk in. 14 ~ .,

DEC IS I ON � CTA CASE NO . 2930 ~ 9- Furthe rmore,� t he followi ng pr oducts con tain saponaceous an d non- yo1at i 1e c om- ponent ~ in exces s of 5%: I TUSS Han d and Body Lotion - ,greater t han 10% TUSSY Lemon Hand and Body Lotion - � � greate r th a n 10% TUSSY C1eansi 9 Cre am - greate r than 60 % . TUSSY Lemon Mo i s turi ze r - 9 reate r t han 10% A8M. REGALA Deputy Adm i n i t ra t o r As explaine d by Mrs. Ofe l i a Ma rcos Al ba i n he r testimony befor e t h is Court (t.s n., J uly 20, 1979 , pp 9 -1 5 )~ t he r e sea r c h c hemist o f t he Food a nd Dr ug Administ r ation who conducte d the seri e s of t ests on t he "Tussy Produc t s � and pr epared he dr aft of the c er tific a t ion above-quo ted, V'tamin A a s c om- ponent of t he pr oduc ts pl ays a l arge par t in t he normal kera tin izat i on of t he skin7 Palmitate is t he J salt o f Vi tam i n A; wh i l e the medicame q t s Methyl-p- hydr oxy be nzoate and Prophyl-p-hydroxy benzoa te act a s an ti f ung a l a ge nt s . The medic ame nts of the "Tu ssy Lemon Hand and Body Lotion", a s eluci da ted by Mr s . Ma rcos Alba , ar e t he same as t he "Tussy Hand a nd Bod y Lo ti on " . Bo r ax or sodium bo rate a s rnedica n1ent i n the "Tu s sy Clea ns i ng Cr ea m'' acts as a mild ~strin - ge n t whe n us ed e xter nally, wh ile Alla n toin, aside 150

� DECISION - CTA CASE O. 2930 - 10 - ., f rom Vitami n A, Methyl'-p-hydroxy be n:Z'oa te a nd Pr ophyl-p- h1droxy benzoate , in "Tus sy Lemon Mo ist- ur izer", acts as a healing agent t hat stimulat e~ the growth o f heal thy ti s sues of t he skin. Me~ thol � i the "Tussy Products" acts as cooling agent and as an antiprurit c or counte -ir ritant, and t he s aponaceous content the reof reacts with an alkali to produce soap. (t.s . n., July 20, 1 979 , pp . 1 3 -~5.) The cert i fication c ommand s much respect and .� we ight , si nce it proc eeds from t he official of t he gover nme nt calle d upon to execute and i mp l emen t the f ood and dr ug laws of t he country. (Regalado vs Yu lo , 81 Phil. 17 3 7 Tan v s . Munici pa li t y of Pagb ilao , Quez on , L-14 284 , April 30, 196 3, 7 SCP-A 88 7; Com- . missioner of I nternal Reve nue vs. P.J. Ki e ne~, L- 24 754, Ju ly 18 , 1975 , 65 SCRA 142 .) . Considering the public and official character of the certification, anq respondent's failure to dispu te or controvert it, we .s ee no rea s onab le g r ound to deny t o the document the -fai t h and cre dence nor mal ly due t hereto. In the r e cen t case of Oro En terprises, Inc . vs . Comm iss i oner of Inte rna l Revenue , CTA Case No. 3004, April 15, 198 3, wherein the fa c tual se tti ng is comparable to tha t in the c ase at bar, this Cour t, speaking through J ud ge Ale x z. Reyes , made obs ervations in the fo l low- ing wo rd s: 1 51

. -� � DECI S I ON - CTA CASE NO~ 29 3 0 11 - In the ca se ~t bar we are not to confuse about a r are addendum to pharma- c opoeia in which f ac t and fabrication become i nd ist ing uisable but about the I usual attr'butes a n i mating t he meaning of medicina l preparati ons as legal ly con templ ated for tax purpose . It may � not therefore be an oversimplication to state that t he find ing of the Food and Drug Administr at ion furnishes t he best me ans of its own exposit i on i n terms of t ractable data ope nly laid and f ully disclosed and as such deserves t he cre- dence t ha t shou ld normally be ac c0rded . Responden point s to no irregul a r ity nor er r or of the r elevance and compe tence required to bash tha t pa tina of legi timac y over the cer tificati on . Fur the r, on t he functi ons and effects of t he med i cament s and c ompone nt s of t he "Tussy Products" on t he s kin, a we ll-known practising doctor who spec i al i zes in de rmat olog y and a 195 4 .,,OYM a \V"ardee in the f ie ld of medicine ,*testified before this Cour t , i nte r ali a , t hat : t.s.n ., Decembe r 1 3 , 1979 , pp. 29-33 .) . ~ (a ) . Vi tamin A, as f ound in the "Tussy Product s " , is for t he purpose of help ing the normal developmen t and grow th of superf ic ial skin cells, main t ain i ng p r ope r ke ra t in i zation of skin wh ich is essentia l f o r pu rposes of protecting t he body surface and regu l at i ng t he harde ni ng o f t he cells as t hey e mana te a nd emerge t o under go ha rd e ni ng . It ther e fore he ps i n the no rma l d e ve opment of skin ce l ls . Vi t ami n A ~ls o improves eyeqigh t, particularly nigh l vision und lwlp~> i t l t .llL *Dr . Pablo o. Campos l Vr�I.J..

.-- DECI SI ON - CTA CASE NO. 2930 .. 12 - nor ma development of ski n pores. (b) . Me thyl-p-lw roxy benzoate is used as a / means o f protecting or preventing, or controlliQg, t he gr owth of both bacteria and f ung i . . (c) . Prophyl- p- hyroxy benzoa te has the same eff ect. (d) Borax is an ant i sept i c , preventing the growth of bac te ri a, a nd at the same time an as t rin- gen t having a drying eff ect when applied to t he s kin exte rna lly. (e) . All antoin enhances proper formation of tiss ues i the granulation process, having a healing e ff ect. (f) The p r esence of Vitamin A, Nethyl-p-~yroxy be nzoa te , Pr ophyl- p-hy roxy benzoate , Al lantoin, borax and Palm i t ate in t he "Tu s s y Products" makes t hem have c urative effec ts . That i n the manufactu re of the "~ussy Prod uct s " t hGse med ic amen t s and c omponents were used a nd main tained all through out the manufac turing pro- ce s s at spec if i c weight , at prope r tcmp~ra t ur e and passed quality control test had been test if ied to by pet i tioner ' s assistan t plan t manager and shown in Exh i bi ts "G" to "V". Si nce petitioner ' s " Tussy Product~ ", by v i rtu e of their medicaments , functions and t he r apeucic 153

DECISION - CTA CASE NO . 2930 - .13 - us e s, are used in the t rea tmen t a nd prevention o ski n probl ems , it seems c le ar beyond doubt tha t the contr overted pr oduc ts in the wor ds again of . Judg~ Alex z. Reyes i n Oro Enterpr ises, "fit i dto � a n appropriate lega l cubbyho le for medi c i nal pre- par ations aptly c ha r acterized in a n a na logous ca se ~ 'A� used i n the Tarif f Act of Ma rc h 3, 1883 (C. l 21, Schedule 2 , 22 S ta .. 494) .t hese medic ina l pr epa ra tions me an such art ic le s , as are of use or be lieve d by th~ presc ribe r or user fai r ly and honestly to be of use, in c ur i ng or a l l evia ting or pall iat ing or preventing some disease o r affection o f the human bod y ' (La Tonde na, Ince vs . Col l e ctor of Intern a l Re ve nue and - CTA1 L-1433 6 , April 30 , 1964 , 1 0 SCRA 713.) ". In La Tondena , the Supreme Cou r t had oc ca sion to def ine t he t e rm "medic i nal preparations" as fo l lows : "Medicinal preparat ions" consists of J two words, ' medic i na l' and �~repar ation .' ' M.edicina l' means cu r ative o r a lleviative used f or the cure or alleviat ion of body di sor ders (Words and Phrase s, Volo 264 p. 61 6)e 'Preparatio~ a re t hose which are prepared or something equipped or compounded f o r pa rti c ular purposes (Wor ds and Phrases, Vo l . 33 , p. 350) . Med i cina l pr eparations are therefore descriptive of and r efer t o substan es used i n medi- cine and prepared for the use of the apotheca ry o r the physician to be admi- niste re d as a remedy for di ea s es . As use d i the Tar if f Act of March 3, 188 3, t hese medicina l p reparations me an suc h art icles as a r e believed by the pr escriber o user fairly and honestly t o be of use i n curing or allevia t ing or pallL)tinq or pr event i ng some disease or af fliction of the human bod y."

� DECIS ION - CTA CASE NO . 2930 - .14 - "This cour t $ hall avoid confus ing itself with te rms t hat have been we l l and c learly defined. I t shall not hesi tate to s tate t ha t petit ioner 's I pr oducts , espec ially rubb ing alcohol are medic ina l pre parations. The r ubb i ng alcohol which i s essentially denatured � � ethyl a l cohol is used as an ant iseptic to i nh i b it the growt h of bac te ri a . " The ne t result the r e fo re is that peti t i oner's "Tussy Produc ts " are .n...o....t. t oi let articles or p r epa- ra tions within the pur vi ew of Section 184 b) .of the 193 9 Na tional I nt er na l Reven ue Code . Accor d i ngly , such pr od uct s a re _n__o___t_. su b ject to the 70% sales t ax presc r ibed the r ein but to t he 7% sa les t ax unde r Sect ion 186 of the same Code . Section 186 provides th a t " articles no t en umerated in sect ions 184 , 184-A, 185 , 18 5 -~ , 185-B and 186-B", ar e o r J ina ry article z whic h ar e sub j ect to t he sales tax of 7%. Wo r t hwhi l e noting i n this connect i on are the f ol l ow ing rul ing s of r esponde nt on similar prod~c ts which a r e used , just li ke the "Tus sy eroducts " under c ons ider a ti on, in the tr eatme nt a nd p re ve ntion of skin p roblems: (1) Yang Fai Su Medicated Powder (' ream, G-Moon , Medic ated Powder Cre am and Ennro E-Moo n Medi cinal Face Cream, whic h are r egis tered with the Food and Drug Administrat ion an d certified to by s aid office t o c ontain s a lyc ylic acid and resorcinal wh ich act as ~eratoly t ic and antif ungal age n ts anu tha t Lhe y 1 55 :

' ~\ t --- � DECISION - CTA CASE NO. 2930 .. .1�5 - ., are i ndic ated for dem a~i t is, p r uritus and acne ttea t men t, a�re s ubject to 7% sales t ax pursuant I to Section 186 of the Tax Code (BIR Ru l ing March 26, � j, � 197 4, Exhibit " E-4 " ; For ma l Of fe r Pe t i t i o ner'~ Evide nce , Pe 3)~ (2) . Yardley Liquid Ha ir Con trol whic h c on tains I rga s an DP-3 00, a bactericide and fungic "de as c e r - ti f i ed by t he Food a nd Dr ug Administration is s ub- j e ct als o t o 7% sa le s tax (BIR Ruling, Ap r il 30 , 1976 , Exhi bi t "E- 6."; ib id. , P� 3) . ( 3) . B-M.oon Med icin al Cream and Sun Tung Med i- c ated Pomade which ar e Food a nd Drug Admi n i stra t ion r egistered an d ce rt ified to as containing med i caments which are anti-pru r itic, ke ra tolytic and an t i-bac t er ial a ge n t s, and c ont a ini ng al so 19.54% and 20.1 0% s apon a - c e ous ma t te r, are s ubject to 7% s ales tax pre s cr i be d i n Sec tion 18 6 of the Tax Code (BIR Ruling, Se ptembe r 8 1 19 76, Exhi b it "E-8", ibid., p. 3) .. ( 4) Ha ns on Her bal Shampoo and Hanson Super Fr e Sh Sh ampoo, c han ged to Morni ng Dew Herbal Shampoo t han 5% sapon ac eous matter and there f ur~ parta king t he na tu r e of soap and intended solely for deans i ng, a r e t axable at t he rate of 7% sales tax prescribed i n Sec tion 18 6 of t he Tax Code . (BIR Ruling, 1 5lJ

�- � DEC I SION CTA CASE NO 2930 - 16 - Dece mber 6 1 197 5, Exhib it "E-9." 1 ibid., p. 3) . (5 ) an�d other rul i ngs of t he Office of the I Re s ponde n t to the ef fect t hat medicina l pre parations and/o r those products c on tain i ng more than 5% sapo- � ,;.. naceous mat te r are s ubject to 7% sales tax (Exhib its "E", "E - ~" , " E- 2'' 1 "E-3.", "E- 5" and " E-"/," ~ ibid. 1 . p . 3) �. To our mind, the s;e ruling s have s l: r ong pe rsuasiv e for ce , e specially whe r e t he l aw-making au th or ity , with fu l l kn owledge of suc h inte rp retation, has r ee nacted t he provisions of Section 184 (b ) .and Sec t i on 186 of the 1939 Na tion a l Intern a l Reve nue Code i n to Sections 194 (b) .and Sec t ion 199 o f the 1 977 Na tional Internal Revenue Code wi t hou t sub- stan ti a l c ha nges . The v iew has often been expressed that reenactment of a law without substantial amend- ment after it had long been e nfo rc e d by a dminisua t ive offic ials char ged with its enforcemene is t antamount t o legis l a tive approva l d the administrative inter- pr eta tion . (As turi as Sugar Cent ral vs . Commiss i oner of Inte r nal Re ven ue , L-1933 7, Sept . 30, 19 69, 29 SCRA 617 ; Commissio ner of In t er nal Rev e nue v s . Ledesma, L-1750 9, Jan. 30 , 1970, 31 SCRA 95 : Inter-Provincial Au t obu s vs. Collector of Internal Reven~e, 98 Phil. 290; Mi ndanao Bus Co. vs. Co l le c tor of InternQl

,._, � DEC I SI ON - CTA CAS E NO . 2930 - 17 - Re venue, L-1.40 78 , Fe b.' 24 , 1 96 1, l SCRA 538 . ) . Fa r be it f r om a� the o r e tical gobbledygook t he ru l ing s I lend settl i ng eloquenc e to the pr eci s e issue raised i n the case a t ba r . (Or o Enterpri se s, I nc . v s .� Comm i ssi oner o f I n ter na l Re ve nue , supr .~ .) . I n a n e ff ort to d i scred it t he me d ici nal fu nc ti on s and ther apeut ic uses of pet itione r ' s "Tussy Products ", r esponde nt wou ld howP. ver f i nd comf or t in the l a be l s of t he produc t s which pr e s ent and descr ibe them as l o t ions , mo i stur i ze rs a nd cleans i ng c r e ams inste ad of name s a nd de s cr ip t i ons i ndic a ting t heir med i cinal cha r acte r i st i c s. Neve r th e le s s , t o quote once more t he obse r vations of Ju dg e Al ex z. Re yes on t his point i n Or o En terprise s : The a ppa r ent qu i bble on t he descrip- tive te rm , " l otion " as c r e a t i ng t he i mp re ssion an d evok ing t he conno tat ion that the p r ep ar ati on i s co sme ti c , doe s not c hange t he basic fact that the con- tr overted pr oduc t by nature, f ormulati on and pur pose, as found and certi f fed , is med i c in a l . �what ' ~ i n a name ? , t ha t wh ic h we c a ll a ro se , by any � o t he r name wou l d sme l l a s s wee t ! " We do not t hink t he c ert 'f ication is a mere cosmetic e ffort to d i s gu ise the tr ue na't ure and c har ac te r o f t he que s ti oned pr oduct. We t he ref o re f e el c ompe lled t o af firm i ts i mpo r t and fo rce lest i t be s uf f er ed to petr ify i n fu t ili t y. At a ny r a te , as e xp l a ined by pet i tioner i n h i s l ette r d a ted Ja nua ry 13 , 1978 to r espondent r e quesl i n ~ 158

~I rf't l I � f � DEC ISION - CTA CASE NO. 29 30 ... 1 8 a tax credit/refund of' the amount involved in this c ase , "these� names are marketing strategies desig ned I to att rac t mo re the buying publ ic that i f they are to be called by med ical names" (p. 28, BIR r eco�rds .) And a medicinal pre para t ion does no t l ose i ts char- ac t er a s such because it is sold over the counter to the public generally, rather than to druggist , phys ic ia n and me dic al institution to be admi nistered hype r dermically by physicians. (Vital Corp vs. Knox Co . , Cre st. & App. 143 F, 2d 883, 888. ) Hav i ng r e ached the conclusion that the "Tussy Pr oducts" i nvolved in this c as e should be classified as "med ic inal p reparations " subject to the 7% sales t ax presc ri bed in Sect ion 186 of the ~ax Code , in s te ad of t he 70% s a les tax pa i d by pe titioner under Section 1 84 ( b ) ~ p e titioner is the refore en t itled to the refund or tax cr edi t of the amo unt of ~509,82S . GO, r e presenting the difference betwee n th'e 70% and t he 7% sales tax f or the pe riod starting the 4th quarter of 19 75 to the 4th quarter o f 1976, the written clnim for r efund or tax credit th;�reol hclVl!l�J LJ(::cn J?L"OlJerly filed with respondent and the suit for recovery seasonably i ns ti t uted with this Cour t in accordance with the th en Se c tion 306 of the National Internal Revenue Code . 15U

DECIS ION - CTA CASE NO. 2930 - 19 - WHEREFORE, r e spondent Commiss ioner of Inte r- nal Revenue �is hereby ordered to grant a tax c r edit I in favor of petitioner Win throp-Stearns , Inc. t Qe amount of P509 , 825 . 00 . Without pr onounc eme nt as � to cos ts . SO ORDERED. Quezon City, Metr o Mani la, May 30, 1983 . Q;ud~ AMANTE fiL LER Presiding Judge J WE CONCUR: 7C~~~0AQUIN Assoc iat e Judge 1 60