AVON PRODUCTS MANUFACTURING, INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY Third Division AVON PRODUCTS CTA Case No. 8378 MANUFACTURING, Members: INC., Petitioner, -versus- BAUTISTA, Chairperson PABON-VICTORINO, COMMISSIONER OF and INTERNAL REVENUE, RINGPIS-LIBAN,]]. Respondent. Promulgated: SEP 9 2D14 )(---------------------------------- --- ~-;1~~-?.r<r~�~� - )( AMENDED DECISION RINGPIS-LIBAN,J.: For this Court's consideration is a Motion for Reconsideration flied by petitioner Avon Products Manufacturing, Inc. (Avon) on May 19, 2014 asking for reconsideration of our Decision dated May 6, 2014 (Decision) which denied petitioner's claim for refund of Thirty Eight Million Five Hundred Si>Cty One Thousand Two Hundred Ninety Two Pesos and Forty Three Centavos (P38,561,292.43) representing erroneously paid excise taxes on non-essential articles under Section 150 of the National Internal Revenue Code of 1997 (1997 NIRC) for the period January 4, 2010 to December 31,2010. Petitioner's Grounds for Reconsideration Petitioner presented the following as grounds for reconsideration: 1. The definition of toilet waters under BIR Ruling 43-2000 and RMC 17-02 is invalid, devoid of legal force and effect, and cannot supplant the definition of toilet waters under Revenue Regulations No. 8-84 because under Section 244 of the 1997 NIRC only the Secretary of Finance can provide the definition of "toilet waters" and the details of Section 150(b) of the 1997 NIRY

RESOLUTION on Motion f or Reconsideration CTA Case No. 8378 2. The power of the Commissioner of Internal Revenue to interpret tax laws does not include the power to promulgate Revenue Regulations. Under Section 244 of the 1997 NIRC, the Commissioner of Internal Revenue can only recommend to the Secretary of Finance a Revenue Regulations; 3. The definition of toilet waters under Revenue Regulations No. 8- 84 continues to be effective considering that, as correctly found by the Honorable Court, the essential wordings "perfumes" and "toilet waters" remained the same despite several amendments to the NIRC and neither Congress nor the Secretary of Finance has provided a new definition of "toilet waters"�' 4. The defmition of toilet waters under Revenue Regulations 8-84 still applies in construing Section 150(b) of the 1997 NIRC under the rules of statutory construction such as the principle of legislative approval of administrative interpretation by reenactment; and 5. The obstinate refusal of the Respondent to answer whether or not it collects the 20% excise tax on the colognes to the addressee of BIR Ruling 43-2000 and the other evidence adduced by petitioner show that respondent has not abandoned the definition of toilet waters under Revenue Regulations No. 8-84 and has not in fact enforced BIR Ruling 43-2000 even against the addressee. Respondent's Opposition On June 6, 2014, respondent Commissioner of Internal Revenue filed its Opposition thereto, arguing the following: 1. Revenue Memorandum Circular No. 17-02 (RMC 17-02) which emphasized BIR Ruling 43-2000 correctly defines "colognes" and declares null and void all previous BIR rulings pertaining thereto and that such is a valid interpretation of Section 150(b) of the 1997 NIRC; 2. RMC 17-02 and BIR Ruling 43-2000 must be accorded great respect like any other administrative issuance, they being interpretations intended to carry out the provisions of the 1997 NIRC; 3. The application of Revenue Regulations No. 8-84 (RR 8-84) is limited to the percentage taxes on cosmetic products imposed under Section 194(b) and (e) of the 1977 Tax Code which was subsequently renumbered and amended as Section 163 und Presidential Decree No. 1994 (PD 1994), and hence, RR 8-84 may not be adopted to implement Section 150(b) of the 1997 NIRC which pertains to the imposition of excise tax~

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 4. An amended act such as the 1997 NIRC must be construed as though the original statute had been repealed and a new and independent act in the amended form had been adopted in its stead. Therefore, the amended act should be given a construction different from that of the law prior to its amendment; 5. By virtue of Section 29 of Executive Order No. 273 (EO 273) there was intent on the part of the legislature to repeal regulations inconsistent with EO 273 such as RR 8-84; and 6. Claims for refund partake the nature of exemptions and should be strictly construed against the claimant. The Ruling of the Court on Reconsideration Whenever a motion for reconsideration is filed by a party, as long as the same adequately raises a valid ground, this Court has to evaluate the merits of the arguments to prevent an unjust decision from attaining finality. There are instances where members of appellate courts do change their minds after restudying the facts and the law, gaining a broader perspective by a mutual exchange of views, and considering the facts of the case against the backdrop of the ever changing conditions of society. After a thorough re-examination of the case, we flnd that our Decision dated May 6, 2014 overlooked certain aspects which, if not corrected, would cause extreme and irreparable damage and prejudice to petitioner. This Court, therefore, grants petitioner's motion for reconsideration. Change in T ype of Tax Imposed; No Change in Definition of Taxable Item There is no question that ever since "toilet waters" was introduced as a taxable item via statute, it has been subject to different types of taxes. Under Section 194 of the 1977 National Internal Revenue Code (NIRC), it has been subject to percentage taxes. On June 5, 1984, when Revenue Regulation No. 8-84 (RR 8-84) came into effect, it continued to be subject to percentage taxes. On January 1, 1986, Section 23 of Presidential Decree No. 1994 (PD 1994), amended Section 194 of the 1977 NIRC and renumbered it as Section 163. It further reduced the percentage tax rate imposed on "toilet waters" from 70% to 50%/

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 On January 1, 1988, Executive Order No. 273 (EO 273) replaced the sales tax with the value-added tax 01AT) and the excise tax. It amended and renumbered Section 163 of the 1977 NIRC as Section 150 of the 1977 NIRC. Instead of imposing a percentage tax, an excise tax of 20% based on the wholesale price or value of the "toilet waters" was imposed. About a decade later, on January 1, 1998, when the Tax Reform Act of 1997 took effect, the amended Tax Code kept the imposition of excise tax on "toilet waters" also in Section 150 thereof. The amendments made by EO 273 to the 1977 NIRC remained and were adopted in the 1997 NIRC. As the facts stand, the kind of tax imposed on the taxable item -- "toilet waters" -- has varied through the years, beginning with a percentage tax or a sales tax, and evolving into an excise tax. Neither party disputes that. However, the type of tax the legislature decides to impose on a certain thing or item is decidedly different from the thing or the item w hich is subject to the tax. That is the crux of the controversy here which this Court decided merits a second, deeper look into. How has "toilet waters" been defined throughout all these legislation? And given that the 1997 NIRC did not provide for a definition of the term, what did the legislators have in mind when they crafted Section 150 of the 1997 NIRC? Revenue Regulations No. 8-84 Remains to Be the Standing Administrative Issuance Defining "Toilet Waters" The 1997 NIRC, as amended, did not provide for a definition of the term "toilet waters". The first instance that "toilet waters" was defined since its inclusion in the 1977 NIRC was in RR 8-84, the Cosmetics Products Regulation. "Toilet waters" was defined as "scented alcoholic or non-alcoholic preparations primarily used as body fragrance containing essential oils, i.e. more than 3% by weight. Examples: Lavender water, Eau de Cologne, Eau de Toilette. "6 It was only when the CIR issued BIR Ruling No. 43-2000 on September 15, 2000, which was subsequently published in RMC No. 17-02 (RMC 17-02), that the term "toilet waters" was deemed to include "colognes". From 1984 up until September 15, 2000, "toilet waters" were construed as those preparations which contained essential oils that were more than 3% by weigh/r" 6 Cosmet ic Product s Regulation, Revenu e Regulations No. 8-84, June 5, 1984.

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 However, if we are to ascertain legislative intent to properly construe "toilet waters", then we must ascertain what the legislative intent was when Section 150 was crafted and included in the 1997 NIRC. Subsequent to that, the administrative interpretation of "toilet waters" by the CIR must be compared and contrasted to legislative intent to see if its own definition of the taxable item passes muster. Administrative Interpretation Entitled to Great Weight Respondent claims that the RMC in question, RMC 17-02, ought to be accorded great respect like any other administrative issuance since they are interpretations intended to carry out the provisions of the Tax Code. In support of this, respondent cited CIR vs. Solidbank Corporation7 and La Suerte Cigar and Cigarette Factory vs. CTA8. In the La Suerte case, the Supreme Court opined that "[w]hen an administrative agency renders an opinion by means of a circular or memorandum, it merely interprets a pre- existing law. Construction by an executive branch of government of a particular law although not binding upon the courts must be given weight as the construction came from the branch of government called upon to implement the law."9 � This Court holds the principles cited by respondent in the aforementioned cases to be sound. However, the cited cases themselves contain their own caveats as to when such administrative interpretation is entitled to great weight. The La Suerte Case exhorts that the circular or memorandum rendered by the administrative agency must merely interpret a pre-existing law. The Solidbank Case, on the other hand, mandates that "[Regulations] are valid as long as the standards set by the legislature are complied with. Specifically, the regulation must be (1) germane to the object and purpose of the law; (2) not contradict, but conform to, the standards the law prescribes; and (3) be issued for the sole purpose of carrying into effect the general provisions of tax laws." As Justice Bautista alluded to in his Dissenting Opinion to our Decision on May 6, 2014 (Original Decision), it is only "[when] there is doubt as to the proper interpretation of a statute, [that] the uniform construction placed upon it by the executive or administrative officer charged with its enforcement will be adopted, if necessary to resolve the doubt.'? 7 G.R. No. 148191, November, 2003. 8 G.R. No. L-36130, January 17, 1985. 9/d. 10 Justice Bautista's Dissenting Opinion to Decision in CTA Case No. 8378, May 6, 2014.

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 We find that there is no ambiguity in the definition of "toilet waters" in the Cosmetic Products Regulation. The abbreviation "i.e." or "id est" literally means "that is. "11 Legal writers usually write "i.e." to inform the reader that what follows is an explanation of what had just been stated.12 Thus, the clause "more than 3% by weight" is not a mere example of the essential oil content but is actually a description of the alcoholic or non-alcoholic preparation containing essential oils. The scented alcoholic or non-alcoholic preparations must have essential oil content of "more than 3% by weight" in order to be considered as toilet waters under the regulations.13 In Dumag uete Cathedral Credit Cooperative [DCCCO] v. CIR14, the Supreme Court held: "It bears stressing that interpretations of administrative agencies in charge of enforcing a law are entitled to great weight and consideration by the courts, unless such interpretations are in a sharp conflict with the governing statute or the Constitution and other laws. In this case, BIR Ruling No. 551 - 888 and BIR Ruling [DA-591-2006] are in perfect harmony with the Constitution and the laws they seek to implement. Accordingly, the interpretation in BIR Ruling No. 551-888 that cooperatives are not required to withhold the corresponding tax on the interest from savings and time deposits of their members, which was reiterated in BIR Ruling [DA-591-2006], applies to the instant case." At issue is the weight this Court ought to give to RMC 17-02, BIR Ruling No. 43-2000, and RR 8-84 -- all administrative issuances. However, we find that there is a pervading dissonance between RMC 17-02, BIR Ruling No. 43-2000, and Section 150 of the 1997 NIRC, the law it seeks to implement, which will be discussed further below. BIR Ruling No. 43-2000 and RMC 17-2000 Cannot Amend the Definition of "Toilet Waters" Under the Regulations The Bureau of Internal Revenue (BIR) website15 defines the vanous administrative issuances as follows: "Revenue Regulations (RRs) are issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, that specify, prescribe or define rules any 11 ld. citi ng Black's Law Dictio nary, 8th Editio n. 12 ld. citing Ulep, Mauricio C., Lat in Words and Phrases for La wyers and Stu dents. 13 ld. at Note 6. 14 G.R. No. 182722, January 22, 2010. 15 http:/ / www.bir.gov.ph/lumangweb/ hom_issrul. html.

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 regulations for the effective enforcement of the provisions of the National Internal Revenue Code (NIRC) and related statutes. Revenue Memorandum Circular (RMCs) are issuances that publish pertinent and applicable portions, as well as amplifications, of laws, rules, regulations and precedents issued by the BIR and other agencies/offices. BIR Rulings are the official position of the Bureau to queries raised by taxpayers and other stakeholders relative to clarification and interpretation of tax laws." (Emphasis ours) Even a cursory look at the definitions given by the BIR itself would reflect a hierarchy within the administrative issuances that could be issued by the BIR. This is only but proper since whatever powers the Secretary of Finance (SOF) or the CIR has are necessarily derived from the originating statute, the 1997 NIRC. Section 244 of the 1997 NIRC expressly grants the power to promulgate rules and regulations to the SOF, as follows: "SECTION 244. Authority of Secretary of Finance to Promulgate Rules and Regulations. -- The Secretary of Finance, upon recommendation of the Commissioner, shall promulgate all needful rules and regulations for the effective enforcement of the provisions of this Code." On the other hand, rulings made by the CIR are by virtue of the power to interpret tax laws and decide tax cases granted unto her under Section 4 of the N I R C 16 . The finer distinctions of the powers granted to the SOF and the CIR, respectively, were discussed by the Supreme Court in BPI Leasing Corporation v. Court ofAppeals17 in this wise: "Administrative issuances may be distinguished according to their nature and substance: legislative and interpretative. A legislative rule is in the matter of subordinate legislation) designed to implement a primary legislation by providing the details thereof. An interpretative rule) on the other hand) is designed to provide guidelines to the law which the administrative agency is in charge of enforcing/ 16 1997, NIRC. "SEC. 4. Power of the Commissioner to Interpret Tax Laws and Decide Tax Cases.-- The power to interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction of the Commissioner, subject to review by the Secretary of Finance." 17 G.R. No. 127624, 18 November 2003.

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 The Court finds the questioned revenue regulation to be legislative in nature. Section 1 of Revenue Regulation 19-86 plainly states that it was promulgated pursuant to Section 277 of the NIRC. Section 277 (now Section 244) is an express grant of authority to the Secretary of Finance to promulgate all needful rules and regulations fo the effective enforcement of the provisions of the NIRC. In Paper Industries Corporation of the Philippines v. Court of Appeals, the Court recognized that the application of Section 277 calls for none other than the exercise of quasi-legislative or rule-making authority. Verily. it cannot be disputed that Revenue Regulation 19-86 was issued pursuant to the rule-making power of the Secretary of Finance. thus making it legislative, and not interpretative as alleged by BLC."18 (Emphasis ours) The case before us involves only one Revenue Regulation -- RR 8-84 -- which gives the definition of "toilet waters" . This regulation was created pursuant to the rule-making authority of the SOF and has the effect of law. Therefore, if the SOF has the power to promulgate regulations, and the CIR has the power to interpret the law under Sec 4 of the 1997 NIRC, such interpretation cannot overstep its mandate and override regulations that the SOF has prescribed. As such, petitioner is correct in asserting that although the CIR has the power to amplify laws, rules and regulations previously issued, the CIR, through RMC 17-02 and BIR Ruling 43-2000, cannot amplify Section 150 of the NIRC or modify the existing definition of "toilet waters" under Revenue Regulation 8-84 which is an administrative regulation issued by the Secretary of Finance pursuant to his rule-making powers. In fact, this rule-making power given to the SOF is so sacrosanct that despite the broad authority given to the CIR to delegate powers vested in her to select subordinate officials under Section 7 of the NIRC, "[t]he power to recommend the promulgation of rules and regulations by the Secretary of Finance" is one out of the four items which the CIR may not delegate.19 This only confirms that while the CIR has the power to recommend the promulgation of rules and regulations to the SOF, the legislative aspect is actually reserved for the SOF. Therefore the CIRs interpretation of the law- - Section 150 in this case -- is limited by existing regulations promulgated by the SOF on the matter, specifically RR 8-84/ 18/d. 19 1997, NIRC. "SEC. 7. Authority of the Commissioner to Delegate Power. -- The Commissioner may delegate the powers vested in him under the pertinent provisions of this Code to any or such subordinate officials with the rank equivalent to a division chief o higher, subject to such limitations and restrictions as may be imposed under rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner: Provided, however, That the following powers of the Commissioner shall not be delegated : (a) The power to recommend the promulgation of rules and regulations by the Secretary of Finance; X X X"

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 Even jurisprudence confirms this hierarchy within administrative issuances. In Bank ofthe Philippine Islands vs. Commissioner ofInternal Revenue,20 the Supreme Court held that a Revenue Memorandum Circular is merely an administrative interpretation of the law which cannot be given effect if it is contrary to a Revenue Regulation. The pertinent excerpt from the case is quoted below: "Second. Petitioner contends that what Section 78 required was an information return, not an income tax return. It cites Revenue Memorandum Circular No. 14-85, of then Acting Commissioner of Internal Revenue Ruben B. Ancheta, referring to an "information return" in interpreting Executive Order No. 1026, which amended Section 78. The contention has no merit. The circular in question must be considered merely as an administrative interpretation of the law which in no case is binding on the courts. The opinion in question cannot be given any effect inasmuch as it is contrary to Section 244 of Revenue Regulation No. 2, as amended, which was issued by the Minister of Finance pursuant to the authority granted to him by Section 78 of the Tax Code. This regulation prevails over the memorandum circular of the Acting Commissioner of Internal Revenue, which petitioner invokes."21 (Emphasis ours) This Court is reminded that a revenue regulation is binding on the courts as long as the procedure fixed for its promulgation is followed. Even if the courts may not be in agreement with its stated policy or innate wisdom, it is nonetheless valid, provided that its scope is within the statutory authority or standard granted by the legislature.22We find that respondent exceeded her authority in providing a new definition of toilet waters in RMC 17-02. If the technical definition of toilet waters under Revenue Regulations 8-84 will have to be modified, the SOF must promulgate a new amendatory revenue regulation to provide a new definition for the term "toilet waters". The definition of the term "cologne" lifted from Hawley's Condensed Chemical Dictionary cited in BIR Ruling No. 43-00 and published in RMC 17- 02, will hardly suffice as its purported authority cannot override legislation by the legislature or the quasi-legislation by the SOF, those specifically authorized to wield it. Ultimately, the definition of "toilet waters" under the RR 8-84 must still be followed including the requirement for essential oil content of more than 3% by weighy 20 363 SCRA 840 (2001) . 21 Bank of the Philippine Islands v. Commissioner of Internal Revenue, G.R. No. 144653, August 28, 2001, 363 SCRA 840. 22 ld. at 448-449.

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 BIR Ruling No. 43-2000 and RMC No. 17-02 are Both Overbroad and Disregard Intent of the Law; Intent is to Tax Non-Essential Goods or Luxury Iterns In order to give us a more holistic perspective on how "toilet waters" is to be construed, we must look at the intent of not only RR 8-84, but also Section 194 of the old Tax Code where it was mentioned in the fust instance. Section 194 of the 1977 Tax Code imposed a percentage tax on "jewelry, toilet preparations, and others ". "Toilet waters" was listed under Section 19423 along with perfumes, essences, extracts, and the like. Section 194, however, did not provide a definition for "toilet waters". Subsequently, RR 8-84 was issued to implement the percentage tax on cosmetic products imposed under Section 194 (b) of the 1977 N IRC and it defined "toilet waters". Over time, Section 194 of the 1977 Tax Code was amended. It was amended by Section 23 of PD 1994 and Section 194 was renumbered to Section 163. PD 1994 imposed a "percentage tax on the sale of NON- ESSENTIAL Articles". "Toilet waters" was listed under Section 163 along with the following: "(a) All articles commonly or commercially known as jewelry, whether real or imitation, pearls, precious and semi-precious stones, and imitations thereof; articles made of, or ornamented, mounted or fitted with, precious metals or imitations thereof or ivory (not including surgical and dental instruments, silver-plated wares, frames or mounting for spectacles or eyeglasses, and dental gold or gold alloys and other precious metal used in filling, mounting or fitting of the teeth); opera glasses, and lorgnettes. The term "precious metals" shall include platinum, gold, silver, and other metals of similar or greater value. The term "imitations thereof' shall include plantings and alloys of such metals. "(b) Perfumes, essences, extracts, toilet waters, cosmetics, hair dressings, hair dyes, hair restorations, aromatic cachous, toilet powders, except tooth and mouth washes, dentifrice, toothpaste, talcum and medicated toilet powders, hair oils and pomades. "(c) Dice, mahjong sets and playing cards. "(d) Jukeboxes. "(e) Manufactured parts and accessories of automobiles which are principally for ornamentation of embellishment. "(f) Similar or analogous articles, substances or preparations to those enumerated above as determined by the Minister of Finance upon the recommendation of the Commissioner of Internal Revenue based on the inherent essentiality of the product." / / 23 Section 194 (b), 1977 NIRC.

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 The general rule is that where a general word or phrase follows an enumeration of particular and specific words of the same class or where the latter follow the former, the general word or phrase is to be construed to include, or to be restricted to, persons, things or cases akin to, resembling, or of the same kind or class as those specifically mentioned.24 The purpose of the rule of ejusdem generis is to give effect to both the particular or general words, by treating the particular words as indicating the class and the general words as indicating all that is embraced in said class, although not specifically named by the particular words. This is justified on the ground that if the lawmaking body intended the general terms to be used in their restricted sense, it would have made an enumeration of particular subjects but would have used only general terms.25 Section 163 of the 1977 NRC was eventually amended by EO 273. It renumbered Section 163 to Section 150. Although it changed the kind of tax imposed on "toilet waters" from percentage tax to an excise tax, the item being taxed -- "toilet waters" -- was still categorized under Section 150's "NON- E SSENTIAL GOODS" along with the following: "(a) All goods commonly or commercially known as jewelry, whether real or imitation, pearls, precious and semi-precious stones and imitations thereof; goods made of, or ornamented, mounted or fitted with, precious metals or imitations thereof or ivory (not including surgical and dental instruments, silver-plated wares, frames or mountings for spectacles or eyeglasses, and dental gold or gold alloys and other precious metals used in filing, mounting or fitting of the teeth); opera glasses and lorgnettes. The term ' precious metals' shall include platinum, gold, silver, and other metals of similar or greater value. The terms 'imitations thereof' shall include platings and alloys of such metals; "(b) Perfumes and toilet waters; "(c) Yachts and other vessels intended for pleasure or sports." The amendments made by EO 273 to the 1977 NIRC remained and were adopted in the 1997 NIRC. It is from this point that legislative intent has to be construed because Section 150 of the 1997 NIRC is supposedly what BIR Ruling No. 43-2000 and RMC 17-02 interpreted. Without a doubt, the definition provided by CIR is not only found wanting, but is also overbroad. Since the CIR gave a general definition of "toilet waters", she indiscriminately taxed ALL types of toilet waters, which is not what is contemplated under the statute. RR 8-84 made a distinction between toilet waters or colognes which are considered "Non-essentiay 24 Agpalo, Ruben E., Statutory Construction, 6th Ed., 2009, p. 308, citing Go Tiaco y Hermanos v. Union Insurance Society of Canton, 40 Phil. 40 (1919); Chartered Bank of India v. Imperial, 48 Phil. 931 (1921); Mutuc v. Commission on Elections, G.R. No. 32717, November 26, 1970; 36 SCRA 228; Vera v. Cuevas, G.R. No. 33693, May 31, 1979, 90 SCRA 379. 25 Agpalo, Ruben E., Statutory Construction, 6th Ed., 2009, p. 309, citing National Power Corp. v. Angas, 208 SCRA 542 (1992) .

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 Articles" (those containing essential oils of more than 3% by weight) otherwise known as "Luxury Items" and those whose essential oil content is less than 3% by weight which, logically, would not be considered so. This is the most apt construction of Section 150 of the 1997 NIRC taking into account relevant human experience with the different types of "toilet waters" or colognes out in the market today. It is inconceivable that the legislature, in their collective wisdom, intended to consider all types of toilet waters as non-essential goods at par with jewelry, yachts, and the like. While there are "toilet waters" or colognes being offered by internationally famous design houses as part of their signature scents that considerably have a higher essential oil content which is reflected in the purchase price; there are also "toilet waters" or colognes used by the common Filipino masses to alleviate the effects and stench of pollution, taking public transportation, and the harsh tropical climate which by no stretch of the imagination could be considered a "luxury item". The legislative intent to tax only non-essential goods or cosmetic products is also evident in EO 273 when it removed several items in Section 150 which were previously present in Section 163. In Section 150(b) of EO 273, only "perfumes and toilet waters" remained. The legislature removed the following items: essences, extracts, cosmetics, hair dressings, hair dyes, hair restorations, aromatic cachous, toilet powders, dentrifice, toothpaste, talcum and medicated toilet powders, hair oils and pomades. These items were rightfully removed from the list of "Non-Essential Goods" presumably because two decades after their first inclusion in the 1977 NIRC, these items are now merchandise that are commonly stocked, bought, and sold in grocery stores and supermarket shelves, unlike its counterparts that remained -- "perfumes and toilet waters" which still remain to be displayed in glass casings in high-end department stores and boutiques. The most frequent application of rule of Ejusdem Generis is found where specific and generic terms of the same nature are employed in the same act, the latter following the former. While in the abstract, general terms are to be given their natural and full signification, yet where they follow specific words of like nature they take their meaning from the latter, and are presumed to embrace only things or persons of the kind designated by them.26 The principle of ejusdem generis is based on the proposition that had the legislature intended the general words to be used in their generic and unrestricted sense, it would not have enumerated the specific word~ 26 Agpalo, Ruben E., Statutory Construction, 6th Ed ., 2009, p. 309 citing U.S. v. Santo Nino, 13 Phil. 141, 142 (1909}; see also Director of Pu blic Works v. Sing Juco, 53 Phil. 205 (1929) 27 ld. at p. 310, citing Go Tiaco y Hermanos v. Union Insurance Society of Canton, 40 Phil. 40 (1919); Murphy, Morris & Co. v. Collector of Customs, 11 Phil. 456 (1908}.

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 The rule of ejusdem generis is not of universal application; it should be used to carry out, not defeat the intent of the law. While our focus remains on how "toilet waters" is to be construed, we must not lose sight of the context in which it is mentioned or enumerated in -- "Toilet waters" as a "Non-Essential Good". Interpretation Must Reflect the Intent of the Law In this case, it is quite obvious that the CIR's interpretation of the law is questionable. Interpretation should reflect the intent of the legislature. Unless, the legislature has changed the intent behind the law over time, the interpretation of the administrative agency must be in line with the intent already established behind the law. From the wording of Section 194 of the 1977 Tax Code, PD 1994, and EO 273, the intent of the legislature seems to be unchanged. The type of tax imposed may have changed, but the intent to tax non-essential goods or luxury items has not. In Philippine Bank ofCommunications v. CJR!8, the Supreme Court held that circulars and administrative issuances should not run against the statute passed by Congress. We quote: "When the Acting Commissioner of Internal Revenue issued RMC 7-85, changing the prescriptive period of two years to ten years on claims of excess quarterly income tax payments, such circular created a clear inconsistency with the provision of Sec. 230 of the 1977 NIRC. In so doing, the BIR did not simply interpret the law; rather it legislated guidelines contrary to the statute passed by Congress. It bears repeating that Revenue Memorandum Circulars are considered administrative rulings (in the sense of more specific and less general interpretations of tax laws) which are issued from time to time by the Commissioner of Internal Revenue. It is widely accepted that the interpretation placed upon a statute by the executive officers, whose duty is to enforce it, is entided to great respect by the courts. Nevertheless, such interpretation is not conclusive and will be ignored if judicially found to be erroneous. Thus, courts will not countenance administrative issuances that override, instead of remaining consistent and in harmony with, the law they seek to apply and implement." (Emphasis ours) Hence, the CIR's interpretation cannot be given weight for to do so would, in effect, amend the statute/ 28Philippine Bank of Communications vs. Commissioner of Internal Revenue, Court of Tax Appeals and Court of Appeals, G.R. No. 112024. January 28, 1999.

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 Legislative Approval of Administrative Interpretation by Reenactment We find that in construing the definition of "toilet waters" when Section 150 of the 1997 NIRC was enacted, that the principle of legislative approval of administrative interpretation by reenactment applies. As early as 1984, "toilet waters" had already been defined by RR 8-84 and such definition has not been changed or amended. It is a well-settled rule that when Congress enacts or amends a particular statute, they are presumed to know all the existing laws with respect to the subject matter. Thus, when they enacted the 1997 NIRC, they knew the meaning attached to the term "toilet waters" as provided under RR 8-84, and yet, still included it in the enumeration of taxable items under Section 150. Therefore, the definition of "toilet waters" as "containing essential oils of more than 3% by weight" has been carried over to the 1997 Tax Code's use of the phrase "toilet waters" found in Section 150 thereof. The Supreme Court, in Westem Mindanao Power Corporation v. Cllf9, explains the principle of legislative approval by reenactment in this wise: "Finally, upon the enactment of RA 8424, which substantially carries over the particular provisions on zero rating of services under Section 102(b) of the Tax Code, the principle of legislative approval of administrative interpretation by reenactment clearly obtains. This principle means that 'the reenactment of a statute substantially unchanged is persuasive indication of the adoption by Congress of a prior executive construction.'30 The legislature is presumed to have reenacted the law with full knowledge of the contents of the revenue regulations then in force regarding the VAT, and to have approved or confirmed them because they would carry out the legislative purpose. The particular provisions of the regulations we have mentioned earlier are, therefore, re-enforced. 'When a statute is susceptible of the meaning placed upon it by a ruling of the government agency charged with its enforcement and the ~]egislature thereafter [reenacts] the proVlslons [without] substantial change, such action is to some extent confirmatory // 29 Western Mindanao Power Corporation v. Commissioner of Internal Revenue, G.R. 181136, June 13, 2012. 30 /d. citing ABS-CBN Broadcasting Corp. v. CTA, supra, p. 43, per Melencio-Herrera, J. (citing Alexander Howden & Co., Ltd. v. Collector of Internal Revenue, 121 Phil. 579, 587, April14, 1965, and Biddle v. Commissioner of Internal Revenue, 302 U.S., 573, 582, 58 S.Ct. 379, 383, January 10, 1938). See In re R. Mcculloch Dick, 38 Phil. 41, 77-78, April16, 1918, per Carson, J. (quoting Sutherland, Statutory Construction, Vol. II, [2nd ed.], sections 403 and 404) .

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 that the ruling carnes out the legislative purpose."'31 (Emphasis ours) Similarly, in ABS-CBN Broadcasting Corp. v. CTA32, the Supreme Court held that when a statute is reenacted substantially unchanged, there is a case of legislative approval of administrative interpretation. In that case, Republic Act No. 2343, dated June 20, 1959, which was the basis of General Circular No. V-334, was just one in a series of enactments regarding Sec. 24(b) of the Tax Code. Republic Act No. 3825 came next on June 22, 1963 without changing the basis but merely adding a proviso. Republic Act No. 3841, also dated on June 22, 1963, followed after, omitting the proviso and inserting some words. It was only on June 27, 1968 under Republic Act No. 5431, which became the basis of Revenue Memorandum Circular No. 471, that Sec. 24(b) was amended to refer specifically to 35% of the "gross income." The Court said that "The principle of legislative approval of administrative interpretation by reenactment clearly obtains in this case. It provides that 'the reenactment of a statute substantially unchanged is persuasive indication of the adoption by Congress of a prior executive construction.' Note should be taken of the fact that this case involves not a mere opinion of the Commissioner or ruling rendered on a mere query, but a Circular formally issued to 'all internal revenue officials' by the then Commissioner of Internal Revenue. "33 One of our findings in our Original Decision was that although the Tax Code had undergone several amendments and revisions, the "essential wording has not been changed". Not only has the intent of the framers survived the amendments of laws; but the construction thereof also has as well. This doctrine has been reiterated in other cases, including Commissioner of Intemal Revenue v. American Expres~4 and Dumaguete Cathedral Credit Cooperative [DCCCO] v. Commissioner ofInternal Revenue'5. RR 8-84, therefore, is still authoritative in deflning "toilet waters" and should have the same meaning and effect under the 1997 NIRC as it had since its effectivity in 1984. Furthermore, as petttwner correctly contends, it is an established principle in statutory construction that the technical or legal, and not the ordinary or general, meaning of a word used in a statute should be adopted in oy the construction of the statute, in the absence of any qualification or intention to the contrary.36 Words that have, or have been used in, a technical sense 31 /d. at Note 43 citing Commissioner of Internal Revenue v. Solid bank Corp., 416 SCRA 436, 455, November 25, 2003, per Panganiban, J. (footnoting Alexander Howden & Co., Ltd. v. The Collector [Now Commissioner] of Internal Revenue, supra, p. 587, per Bengzon, J.P., J.); the latter case citing Laxamana v. Baltazar, 92 Phil. 32, 34-35, September 19, 1952, and Mead Corporation v. Commissioner of Internal Revenue, 116 F.2d. 187, 194, November 29, 1940, per Jones, Circuit J. 32 G.R. No. L-52306 October 12, 1981. 33 /d. 34 G.R. No. 152609, June 29, 2005 . 35 G.R. No. 182722, January 22, 2010. 36 Manila Herald Publishing Co., Inc. v. Ramos, 88 Phil. 94, 99 (1951); Manlayon v. Using, 106 SCRA 237 (1981); People v. Salico, 84 Phil. 722 (1949); Rura v. Lopena, 137 SCRA 121 (1986).

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 those that have been judicially construed to have certain meaning should be interpreted according to the sense in which they have been previously used, although the sense may vary from the strict or literal meaning, of the words. 37 The presumption is that the language used in a statute, which has a technical or well-known legal meaning, is used in that sense by the legislature.38 Even a change in phraseology or an omission of certain words will not be held to necessarily alter the construction of the law as amended. Thus, in Greenfield v. Meer9, the Supreme Court held: "The change of phraseology alone does not lead to the conclusion that it was the intention of the lawmaker to amend or change the constructions of the old law as contended by the appellee. For it is a well-establised rule, recognized by the Supreme Court of Ohio in the case of Conger vs. Barker's Adm'r (11 Ohio St., 1); "that in the revision of statutes, neither an alteration in phraseology nor the omission or addition of words in the latter statute, shall be held, necessarily, to alter the construction of the former act. And the court is only warranted in holding the construction of a statute, when revised, to be changed, where the intent of the legislature to make such change is clear, or the language used in the new act plainly requires such change of construction."40 Pursuant to the principle of legislative approval of administrative interpretation by reenactment which we have just discussed above, by carrying over the use of the term "toilet waters" (and not providing for a new definition), EO 273 is deemed to have approved the definition of the term "toilet waters" found in RR 8-84. As Congress did not also provide for a new definition of "toilet waters" in RA 8424 or the 1997 NIRC, Congress is deemed to have reenacted the existing definition. The Spirit Prevails Over the Letter of the Law From the foregoing discussion, we see that the intent behind Section 194 of the 1977 Tax Code was to impose taxes on non-essential goods or what would be considered as "luxury goods". Over time, PD 1994 and EO 273 have specifically identified the items as "non-essential goods". RR 8-84 was needed in order to implement Section 194 of the 1977 Tax Code since Section 194 did not provide a definition for "toilet waters". When RR 8-84 was issued, it provided a definition for this non-essential good. It ~ 37 Krivenko v. Register of Deeds, 79 Phil. 461 (1947). 38 Keepner v. U.S., 11 Phil 669 (1904). 39 Greenfield v. Meer, 77 Phil. 394 (1946). 40 /d.

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 differentiated "toilet waters", the non-essential good contemplated by the law, from other similar products or regular "toilet waters". By specifying that the "toilet waters" contemplated in Section 194 of the old Tax Code must have more than 3% essential oil content, RR 8-84 limited the scope of this statute to luxu ry items. There is a general definition of "toilet waters". However, there are also different kinds of "toilet waters" depending on its ingredients which include aromatic compounds or "essential oils". The "toilet waters" contemplated initially by Section 194 of the 1977 Tax Code is the kind of toilet water that may be considered a non-essential good in the same vein as yachts and jewelry. RR 8-84 solidified the intent behind Section 194 of the 1977 Tax Code by clearly deflning that the toilet waters contemplated by the Section 194 was not just the general type of toilet water but one that was particularly scented, one that was either alcoholic or non-alcoholic, one that was primarily used as a body fragrance, and one that contained essential oils of more than 3% by weight. It even cited examples such as Lavender Water, Eau de Cologne and Eau de Toilette. The cited examples have essential oil content ranging from 2% to 15%41 with Lavender Water containing essential oil with water in equal parts; Eau de Cologne having essential oils ranging from 2% to 5%; and Eau de Toilette having essential oils ranging from typically 5% to as much as 15%. Further, PD 1994 and EO 273, by specifically listing "toilet waters" under "non-essential goodsI articles", recognized the "toilet water" contemplated in Section 194 of the 1977 Tax Code which was solidified by RR 8-84. To put it into perspective, if we were to apply the BIR Ruling 43-2000 which categorically imposed a 20% excise tax on all "scented alcohol-based liquid used as perfume, after-shave lotion, or deodorant", we would be disregarding the distinction the law intended between high-end alcohol-based colognes and any type of generic scented alcohol and requiring the same 20% excise tax across the board. Respondents asserted that the excise tax imposed in the 1997 Tax Code is different from the percentage tax imposed in RR 8-84; and that EO 273 replaced old percentage taxes with value-added taxes; thus, the 1997 Tax Code must be construed differently from the old tax laws. We disagree. The kind of tax imposed on the item may have been changed, but the item that the tax has been imposed upon has not. The items taxed are still categorized under "non-essential goods". Section 194 of the 1977 Tax Code, PD 1994, EO 273, and subsequently Section 150 of the 1997 Tax Code essentially have the same intent, insofar ~ 41 http:1/beauty.about. com/od/fragra nceperf um es/a/difference-between-perf umes. htm

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 they seek to impose a tax, regardless of the kind of tax, on goods of the same nature -- non-essential goods. It necessarily follows, therefore, that the CIR's interpretation of "toilet waters" in petitioner's case does not reflect the intent of the statutes from its conception until its most recent amendment. The definition provided by the CIR is a simple definition of "toilet waters" in general, lifted from a condensed chemical dictionary. A general definition does not reflect the intent of the statute to direct the imposition of the tax on a specific type of "toilet water", one which can be considered a non-essential good. Since the matter at hand involves the imposition of a tax, the taxable item in question must be given a proper technical definition. RR 8-84 provided a technical definition which delineated, among all the types of "toilet waters" on the market, which kind of toilet water was contemplated under the law. In Dumaguete Cathedral Cooperative [DCCCO] v. CIK'2, the Supreme Court reminds the courts on how to discharge its sacred mandate of judicial review, thus: "We need not belabor that what is within the spirit is within the law even if it is not within the letter of the law because the spirit prevails over the letter. Apropos is the ruling in the case of Alonzo v. Intermediate Appellate Court, to wit: But as has also been aptly observed, we test a law by its results; and likewise, we may add, by its purposes. It is a cardinal rule that, in seeking the meaning of the law, the first concern of the judge should be to discover in its provisions the intent of the lawmaker. Unquestionably, the law should never be interpreted in such a way as to cause injustice as this is never within the legislative intent. An indispensable part of that intent, in fact, for we presume the good motives of the legislature, is to render justice. Thus, we interpret and apply the law not independently of but in consonance with justice. Law and justice are inseparable, and we must keep them so. To be sure, there are some laws that, while generally valid, may seem arbitrary when applied in a particular case because of its peculiar circumstances. In such a situation, we are not bound, because only of our nature and functions, to apply them just the same, [is] slavish obedience to their language. What we do instead is find a balance between the word and the will, that justice may be done even as the law is obeyed. As judges, we are not automatons. We do not and must not unfeelingly apply the law as it is worded, yielding like robo~ 42 ld. at Note 35.

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 to the literal command without regard to its cause and consequence. "Courts are apt to err by sticking too closely to the words of a law," so we are warned, by Justice Holmes again, "where these words import a policy that goes beyond them." While we admittedly may not legislate, we nevertheless have the power to interpret the law in such a way as to reflect the will of the legislature. While we may not read into the law a purpose that is not there, we nevertheless have the right to read out of it the reason for its enactment. In doing so, we defer not to "the letter that killeth" but to "the spirit that vivifieth," to give effect to the lawmaker's will. The spirit, rather than the letter of a statute determines its construction, hence, a statute must be read according to its spirit or intent. For what is within the spirit is within the statute although it is not within the letter thereof, and that which is within the letter but not within the spirit is not within the statute. Stated differently, a thing which is within the intent of the lawmaker is as much within the statute as if within the letter; and a thing which is within the letter of the statute is not within the statute unless within the intent of the lawmakers. (Underscoring ours)" Proof Adduced Entitles Petitioner to a Refund We find that petitioner has adduced sufficient proof5 to establish its claim that the splash colognes and body sprays that were removed from its place of production had a percentage of essential oil that was less than 3% by weight, as follows: t1. PRODUCT ESSENTIAL EXHIBIT DESCRIPTION OIL CONTENT Basic Batch/ Percent Formula for After Bath Freshener with y Code 1-01645-1GA 1 AVON HOMEN POWER 1.5% COLOGNE DEODORANT Line of 1.5%, RI Code 1- Y-2 01580, Homen Power 877720, 1.5 LBS Bill of Material of Finished COOL BLUE HOMEN z Ingredient (FI) Code 2 POWERFI 1.5% l1016451GA Cool Blue Power FI 45 Batch control sheets and ICPA report showing essential oil content of certain products manufactured by petitioner from petitioner's Formal Offer of Documentary and Objective Evidence.

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 Z-2 Line of Il-01580 Homen Power 877720, 1.5% BB Batch Control Sheet Lot No. (Annex 4 of 10110924, Cool Blue Homen Exh. PPP) Power/ FI Code I1016451GA BB-1 Line of RI Code 13200 Alcohol SD 40B, 60.0000%,765.000 kg BB-2 Line of RI Code Il-01580 Homen Power 877720, 1.5000%, 19.125 kg Batch Control Sheet Lot EE No.10010416 Cool Blue Enigma Col/FI Code I196941GA COOL BLUE ENIGMA COL EE-1 Line of RI Code 13200 Alcohol 2% SD 40B, 60.0000%,517.200 kg FI EE-2 Line of RI Code I8434 LAV 002 Fix BAT42951, 2.0000%, 17.240 kg FF Batch Control Sheet Lot No.10010092 Cool Blue (Annex 6 of Smooth Col/FI Code Exh. PPP) I1029161GA COOL BLUE SMOOTH COL 1.5% FF-1 Line of RI Code 13200, FI Alcohol SD 40B, 60.0000%, 849.000 kg FF-2 Line of RI Code I1-01679, Cool Blue 235064L, 1.5000%, 21.225 kg GG Batch Control Sheet Lot No. 10010418 Nina P. Princess SC (Annex 7 of FI / FI Code I1037501GA Exh. PPP) NINA P. PRINCESS SC FI 1.5% GG-1 Line of RI Code 13200, Alcohol SD 40B, 60.0000%, 1080 kg GG-2 Line of RI Code Il-03755, Nina R07-521, 1.5000%, 27.000 kg HH Batch Control Sheet Lot (Annex 8 of No.10010510 S Elem Clean Exh. PPP) Spices FI/FI Code I1040371GA S ELEM CLEAN SPICES FI 2.2% HH-1 Line of RI Code 13200, Alcohol SD 40B, 73.0000%, 83.220 kg HH-2 Line of RI Code Il-03514, Fresh Spices UQ204053/00, 2.2000%, 2.508 kg z HSCENT ICY FROST SC FI 1.5% II Batch Control Sheet Lot (Annex 9 of No.10010123 HSCent ICY Frost SC FI/ FI Code //

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 Exh. PPP) 11056471GA Line of RI Code 13200, 11-1 Alcohol SO 40B, 60.0000%, 120.000 kg Line of RI Code 11-05686, 11-2 Heaven Scent AQ182960/ 00, 1.5000%, 3.000 kg .6 HEAVEN SCENT CLASSIC 1.5% JJ Batch Control Sheet Lot (Annex 10 of No.10010029 Heaven Scent BOUQUET Classic Bouquet / FI Code Exh. PPP) 11063441GA JJ-1 Line of RI Code 13200, Alcohol SO 40B, 60.0000%, 1080 kg Line of RI Code 11-06360, JJ-2 Classic Bouquet 86308039, 1.500%, 27.000 kg .2 NINA GIGGLES FI 1.5% KK Batch Control Sheet Lot No.10090253 Nina Giggles (Annex 11 of FI/ FI Code 11118301GA Exh. PPP) Line of RI Code 13200, KK-1 Alcohol SO 40B, 60.0000%, 510.000 kg KK-2 Line of RI Code 11-11856, Nina 2550892, 1.5000%, 12.750 kg HS FRUITY BLOSSOM COL 1.5% LL Batch Control Sheet Lot 10 (Annex 12 of No.10010914 BS Fruity Blossom Col FI/FI Code Fl Exh. PPP) 1119671GA LL-1 Line of RI Code 13200, Alcohol SO 40B, 76.0000%, 1,368.000 kg LL-2 Line of RI Code 145809 Yassou Floral MF-124614, 1.5000%, 27.000 kg MM Batch Control Sheet Lot (Annex 13 of No.10010912 Heaven Scent C. Exh. PPP) Burst FI/ FI Code MM-1 11018351GA HEAVEN SCENT C. BURST 1.5% Line of RI Code 13200, 11 Alcohol SO 40B, 60.0000%, 819.000 kg FI Line of RI Code 11-01867, MM-2 HSCENT AP165493 / 00 CBURST, 1.5000%, 20.475 kg 12 HSCENT SC FRTYLOOPS FI 2% NN Batch Control Sheet Lot RE (Annex 14 of No.10010080 HSCENT sc Exh. PPP) NN-1 FRTYLOOPS FI RE/ FI Code 11015591GA Line of RI Code 13200, Alcohol SO 40B, 77.0000%,

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 277.200 kg NN-2 Line of RI Code I57789, Natural Blk CHRY & NUT, 2.0000%, 7.200 kg 13 NINA LOVABLE SC FI 1.8% 00 Batch Control Sheet Lot No.10010559 Nina Lovable Sc (Annex 15 of FI/FI Code I459241GA Exh. PPP) Line of RI Code 13200, 00-1 Alcohol SD 40B, 60.0000%, 508.800 kg 00-2 Line of RI Code I62639, Lovable 6793, 1.8000%, 15.264 kg 14 NINA KISSABLE SC FI 1.5% pp Batch Control Sheet Lot No.10010125 Nina Kissable (Annex 16 of SC FI/ FI Code I458591GA Exh. PPP) Line of RI Code 13200, PP-1 Alcohol SD 40B, 65.0000%, 458.250 kg Line of RI Code I62529, PP-2 Kissable AN042622/ 00, 1.5000%, 10.575 kg 15 NINA HUGGABLE SC FI 2% QQ Batch Control Sheet Lot No. (Annex 17 of 10010811 Nina Huggable SC FI/ FI Code I458581GA Exh. PPP) Line of RI Code 13200, QQ-1 Alcohol SD 40B, 60.0000%, 1,080.000 kg Line of RI Code I62559, QQ-2 Huggable A0045689/ 00, 2.0000%, 36.000 kg 16 HSCENT FLORAL SHOWER 2% RR Batch Control Sheet Lot No. (Annex 18 of 10010371 HSCENT FLORAL FI SHOWER FI/ FI Code Exh. PPP) I443331GA RR-1 Line of RI Code 13200, Alcohol SD 40B, 60.0000%, 835.200 kg RR-2 Line of RI Code I51789, Project White 443.430E, 2.0000%, 27.840 kg 17 HSCENT FLORAL 1% ss Batch Control Sheet Lot No. 10010293 HSCENT FLORAL PARADISE FI (Annex 19 of PARADISE FI/ FI Code Exh. PPP) I443311GA SS-1 Line of RI Code 13200, Alcohol SD 40B, 60.0000%, 1,080 kg Line of RI Code I6260, SS-2 Tranquil Moments NF7319/ 2, 1.0000%, 18.000 kg

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 18 COOL BLUE AQUA COL FI 1.5% TT Batch Control Sheet Lot No. 10010730 Cool Blue Aqua Col (Annex 20 of FI/ FI Code I433851GA Exh. PPP) Line of RI Code 13200, TT-l Alcohol SD 40B, 60.0000%, 1,020.000 kg TT-2 Line of RI Code I46199, Pleasant 72.702, 1.5000%, 25.500 kg uu Batch Control Sheet Lot No. 10010246 Cool Blue Ice Col (Annex 21 of FI/ FI Code I433811GA Exh. PPP) 19 COOL BLUE ICE COL FI 1.5% UU-1 Line of RI Code 13200, Alcohol SD 40B, 60.0000%, 1,080 kg UU-2 Line ofRI Code I52219, Homen Ice LL012517/ 00, vv 1.5000%, 27.000 kg (Annex 22 of Batch Control Sheet Lot No. Exh. PPP) 10010651 Cool Blue Energy Col FI/ FI Code I433791GA COOL BLUE ENERGY COL 1.5% VV-1 Line of RI Code 13200, 20 Alcohol SD 40B, 60.0000%, 372.000 kg FI VV-2 Line ofRI Code I46189, Oceanic 237.107, 1.5000%, ww 9.300 kg (Annex 23 of Batch Control Sheet Lot No. Exh. PPP) 10011350 HSCent Col Pink Petal FI/ FI Code I196931GA HSCENT COL PINK PETAL 1.5% WW-1 Line of RI Code 13200, 21 Alcohol SD 40B, 60.0000%, 951.000 kg FI WW-2 Line of RI Code I7284, Baby MF-115858, 1.5000 %, 23.775 kg XX Batch Control Sheet Lot No. 10020024 Heaven Scent Lilac (Annex 24 of FI/ FI Code I748083GA Exh. PPP) 22 HEAVEN SCENT LILAC FI 1.5% XX:-1 Line of RI Code 13200, Alcohol SD 40B, 76.8300%, 345.735 kg XX:-2 Line ofRI Code I46059, Seventh Heaven MOD1, 1.5000%, 6.750 kg 23 HSCENT FRESCA COL FI 1.5% yy Batch Control Sheet Lot No. 10010417 HSCent Fresca Col (Annex 25 of FI/FI Code I743873GA Exh. PPP)

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 YY-1 Line of RI Code 13200, Alcohol SD 40B, 80.000%, 1,080 kg HSCENT COL ANGEL YY-2 Line ofRI Code I45789, 24 HSCent Spanish UP-94-A1, zz 1.5000%, 27.000kg BLUE FI HEAVEN SCENT S. (Annex 26 of Batch Control Sheet Lot No. 25 Exh. PPP) 10010241 HSCent Col Angel Blue FI / FI Code I670863GA YELLOWFI 1.5230% ZZ-2 Line of RI Code 14939 HSCent 1.5230% Blue M97-181, 1.5230%, 13.631 kg 2% 1.5% AAA Batch Control Sheet Lot No. 1.5% 10010557 Heaven ScentS. 2% (Annex 27 of Yellow FI/FI Code Exh. PPP) I625013GA AAA-1 Line of RI Code 13200, Alcohol SD 40B, 78.0000%, 1,251.12 kg AAA-2 Line of RI Code I8988 Radiance PN020.398, 1.5230%, 24.429 kg 26 HS BUBBLE PINK FI BBB Batch Control Sheet Lot No. 10010130 HS Bubble Pink (Annex 28 of FI/FI Code 1594681GA Exh. PPP) Line of RI Code 13200, BBB-1 Alcohol SD 40B, 60.0000%, 837.000 kg BBB-2 Line of RI Code 166459 Nina Pink A0045900/ 00, 2.0000%, 27. 900 kg 27 NINA CUDDLES SC FI CCC Batch Control Sheet Lot No. 10010411 Nina Cuddles SC (Annex 29 of FI/ FI Code I484261GA Exh. PPP) Line of RI Code 13200, CCC-1 Alcohol SD 40B, 60.0000%, 294.000 kg CCC-2 Line of RI Code I64659 Cuddles 123733 / E, 1.5000%, 7.350 kg DDD Batch Control Sheet Lot No. (Annex 30 of 10010091 Cool Blue Chill Col FI/ F1 Code I484251GA Exh. PPP) 28 COOL BLUE CHILL COL FI DDD-1 Line of RI Code 13200, Alcohol SD 40B, 60.0000%, 594.000 kg DDD-2 Line of RI Code I64609 Chill A0154772/ 00, 1.5000%, 14.850 kg 29 NINA TICKLES SC FI EEE Batch Control Sheet Lot No.

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 (Annex 31 of 1001 0419 Nina Tickles SC Exh. PPP) FI/FI Code 1478521GA EEE-1 Line of RI Code 13200, Alcohol SD 40B, 60.0000%, 216.000 kg EEE-2 Line ofRI Code 164049 Tickles A0045899 I 00, 2.0000%, 7.200 kg FFF Batch Control Sheet Lot No. (Annex 32 of 10010108 Cool Blue Fresh Col FI/ FI Code 1479431GA Exh. PPP) 30 COOL BLUE FRESH COL Fl 1.5% FFF-1 Line of Rl Code 13200, Alcohol SD 40B, 75.0000%, 616.500 kg FFF-2 Line ofRI Code 163659 Avon Homen 285411, 1.5000%, 12.330 kg FRSHNLITE SWTCRUSH Fl 1.5% 000 Batch Control Sheet Lot No. 31 (Annex 33 of 10020330 FRSHLITE SWTCRUSH Fl REF/ FI Code REF Exh. PPP) 11003691GA Line ofRI Code 13200, 000-1 Alcohol SD 40B, 60.0000%, 558.000 kg 000-2 Line ofRI Code 152129 Primavera LL012951 / 00, 1.5000%, 13.950 kg Petitioner is Entitled to a Refund in the Amount of P38,561,292.43 The claim for refund covers the period starting January 4, 2010 to December 31, 2010. This means that petitioner had two years or until January 4, 2012, at the earliest, within which to file its claim for refund both in the administrative and judicial levels. The administrative claim46 was flied on June 27, 2011 and the judicial claim was flied on November 16, 2011. Clearly, the refund claim was flied within the two-year prescriptive period. To support its claim, petitioner submitted the following documents, which were all examined and verified by the Court-commissioned Independent Certified Public Accountant (ICPA), Constantino Guadalquiver & Co., through its Partner, Mr. Jerome Antonio B. Constantino, to wit: 1. Summary of Excise Tax47 2. Summary of Excise Tax Returns48 3. Excise Tax Returns~ 46 Par. 4, St ipul at io n of Facts, Docket p. 99. 47 Exhibit RR R-5. 48 Exhi bit RR R, Annex I. 49 Exhibits RR R-1 to RRR-la(13).

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 4. Summary of Online Tax Payment Confirmations50 5. Online Tax Payment Confirmations51 6. Breakdown of Erroneously Paid Excise Taxes 2 5 7. Breakdown of Sales Invoices of Erroneously Paid Excise Taxes53 8. Sales Invoices of Erroneously Paid Excise Taxes54 9. Bills of Materials- Finished Stock55 10. Bills of Materials- Finished Ingredient and Basic Batch Percent Formula56 11. Summary of Batch Control Sheets57 12. Batch Control Sheets, Finished Ingredient Evaluation Report and Powder and Hydro Alcohol (PHA) Test Logbook58 13. Document Entry Voucher, Supplier's Invoices, Delivery Receipts and Official Delivery Invoices59 A thorough scrutiny of the evidence submitted before us show that the findings and observations of the Court-commissioned ICPA in his report60 dated July 23, 2012 are indeed accurate. For the period January 4, 2010 to December 29, 2010, petitioner filed with the BIR its Excise Tax Returns and paid 20% excise taxes on its removal of perfumes, toilet waters, splash colognes and body sprays totalling One Hundred Thirty Six Million Three Hundred Fifty Seven Thousand One Hundred Eleven Pesos and Eighty Centavos (P136,357,111.80) which were offset against the advance excise tax payments/deposits made by petitioner, as illustrated below: Balance Carry Over from Previous Return, Exhibits RRR-3 and RRR-3a p 3,058,024.25 Add: Excise Tax Replenishment per Return January 7, 2010, Exhibit RRR-2 p 4,000,000.00 January 14, 2010, Exhibit RRR-2a(1) 4,000,000.00 January 24, 2010, Exhibit RRR-2b(1) 4,000,000.00 January 28, 2010, Exhibit RRR-2c(1) 4,000,000.00 February 4, 2010, Exhibit RRR-2d(1) 4,000,000.00 February 18, 2010, Exhibit RRR-2e(1) 4,000,000.00 February 27, 2010, Exhibit RRR-2f(1) 4,000,000.00 March 10, 2010, Exhibit RRR-2g(1) 4,000,000.00 March 21, 2010, Exhibit RRR-2h(1) 4,000,000.00 Aprilll, 2010, Exhibit RRR-21 (1) 4,000,000.00 50 Exhibit RRR, Annex II. 51 Exhibits RRR-2 to RRR-2k{2). 52 Exhibit RRR, Annex V1 . 53 Exhibits RRR-4, pp . 1 to 86. 54 Exhibits RRR-4-1 to RRR-4-968. 55 Exhibits RRR-6 to RRR-6g(2). 56 Exhibits RRR-7 to RRR-7c(2) . 57 Exhibit RRR-8, pp. 1 to 16. 58 Exhibits RRR-8 -1 to RRR-8-832. 59 Exhibits RRR-13-1 to RRR-13-116. 60 Exhibit RRR.

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 April26, 2010, Exhibit RRR-2j(1) 4,000,000.00 April 28, 2010, Exhibit RRR-2k(1) 2,000,000.00 May 11, 2010, Exhibit RRR-21(1) 4,000,000.00 May 25, 2010, Exhibit RRR-2m(1) 4,000,000.00 June 10, 2010, Exhibit RRR-2n(1) 4,000,000.00 June 20, 2010, Exhibit RRR-2o(1) 4,000,000.00 June 23, 2010, Exhibit RRR-2p(1) 4,000,000.00 July 1, 2010, Exhibit RRR-2q(1) 4,000,000.00 July 8, 2010, Exhibit RRR-2r(1) 2,000,000.00 July 18, 2010, Exhibit RRR-2s(1) 4,000,000.00 July 29, 2010, Exhibit RRR-2t(1) 2,000,000.00 August 4, 2010, Exhibit RRR-2u(1) 4,000,000.00 August 10, 2010, Exhibit RRR-2v(1) 2,000,000.00 August 18, 2010, Exhibit RRR-2w(1) 4,000,000.00 August 26, 2010, Exhibit RRR-2x(1) 2,000,000.00 September 1, 2010, Exhibit RRR-2y(1) 4,000,000.00 September 11, 2010, Exhibit RRR-2z(1) 4,000,000.00 September 15, 2010, Exhibit RRR-2a(2) 4,000,000.00 September 28, 2010, Exhibit RRR-2b(2) 2,000,000.00 October 1, 2010, Exhibit RRR-2c(2) 4,000,000.00 October 15, 2010, Exhibit RRR-2d(2) 4,000,000.00 October 30, 2010, Exhibit RRR-2e(2) 4,000,000.00 November 9, 2010, Exhibit RRR-2f(2l 4,000,000.00 November 19,2010, Exhibit RRR-2g(2) 4,000,000.00 December 1, 2010, Exhibit RRR-2h(2) 4,000,000.00 December 8, 2010, Exhibit RRR-2i(2) 4,000,000.00 December 20, 2010, Exhibit RRR-2j(2) 4,000,000.00 December 27, 2010, Exhibit RRR-2k(2) 2,000,000.00 138,000,000.00 p 141,058,024.25 Total Advance Payment of Excise Taxes Less: Total Excise Tax on Actual Removal per Returns for the period 136,357,111.80 p 4,700,912.45 January 4, 2010 to December 29,2010, Exhibit RRR, Annex I, p.10 Remaining Balance of Advance Payment of Excise Tax per Return as of D ecember 29,2010, Exhibit RRR-1a(13), line 24 The above table readily shows that for the period January 7, 2010 to December 27, 2010, petitioner made several advance payments of excise tax in the amount of P138,000,000.00 which when added to the beginning balance of advance excise tax deposits amounting to P3,058,024.25 will result to an aggregate sum of P141 ,058,024.25, which is more than enough to cover the excise taxes due on petitioner's actual removals per returns amounting to P136,357,111.80. As found by the ICPA, out of the P136,357,111.80 excise taxes paid by petitioner, P38,561 ,292.43 represents 20% excise taxes paid on removals of splash colognes and body sprays containing essential oils of 3% or less by weight, detailed as follow(/

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 E x h ib i t D ate Excise Tax Total Amount of Excise Tax on Indicated Paid Per Excise Tax on Products with RRR-1 Per Excise Return Essential Oil RRR-1a(1) Tax Return Actual Removals Content of 3% or RRR-1b (1) per Summary of RRR-1c(1) 1/4/2010 less per RRR-1d(1) 1/5/2010 Excise Tax Breakdown of RRR-1e(1) 1/6/2010 (Exhibit RRR-5) Sales Invoices of RRR-lf(1) 1/7/2010 Erroneously Paid RRR-1g(1) 1 / 8 / 2 0 10 Excise Taxes RRR-1h (1) 1/9/2010 (Exhibit RRR- RRR-1i(l) 1 / 1 0 / 2 0 10 RRR-1j(1) 1/11/2010 4)61 RRR-1k(1 ) 1/12/2010 RRR-11(1) 1/13/2010 p 180,336.25 p 180,336.25 p 22,753.13 RRR-1m(1 ) 1 / 1 4/ 2 0 10 RRR-1n(1) 1/ 1 5 / 2 0 10 384,771.88 384,771.88 120,395.81 RRR-1o(1 ) 1/16/2010 RRR- 1p (1) 1/ 17/2010 556,092.14 556,092.14 185,333.24 RRR- 1p(1 ) 1/18/2010 RRR-1 q(1) 1/19/2010 684,615.13 684,615.13 291,252.27 RRR-1r(1) 1/20/2010 RRR-1s(1) 1/21/2010 475,944.70 475,944.70 123,084.27 RRR-1t(1) 1/ 2 2 / 2 0 10 RRR-1u(1) 1/23/2010 133,424.41 133,424.41 62,539.78 RRR-1v(1) 1/24/2010 RRR-1w(1) 1/25/2010 564,501.63 564,501.63 31,737.93 RRR-1x(1) 1/26/2010 RRR-1 y(l) 1/27/2010 372,592.26 372,592.26 91,002.66 RRR-1z(1) 1/28/2010 RRR-1a(2) 1/29/2010 929,608.17 929,608.17 255,547.92 RRR-1b(2) 1/30/2010 RRR-1c(2) 1/31/2010 816,018.04 816,018.04 281,253.46 RRR-1d (2) 2/1/2010 RRR-1e(2) 2/2/2010 596,003.85 596,003.85 347,700.87 RRR-lf(2) 2/3/2010 RRR-1g(2) 2/4/2010 758,516.79 758,516.79 221,855.45 RRR-1h(2) 2/5/2010 2/6/2010 239,317.75 239,317.75 95,734.54 2/7/2010 2/8/2010 464,677.22 464,677.22 16,131.51 235,325.12 235,325.12 85,953.22 181,822.16 181,822.16 45,353.74 476,892.59 476,892.59 271,741.56 770,858.39 770,858.39 309,736.42 651,317.45 651,317.45 138,355.01 881,415.82 881,415.82 173,296.65 71,792.82 71,792.82 31,780.98 274,131.52 274,131.52 205,357.11 535,184.79 535 ,184.79 220,318.66 308,198.29 308,198.29 127,011.38 646,611.87 646,611.87 218,169.00 1,031,538.25 1,031 ,538.2 5 512,518.46 1,251,638.66 1,251,638.66 39,780.87 1,065,388.40 1,065,388.40 47,611.39 408,453.59 408,453.59 184,872.08 185,085.92 185,085.92 134,453.65 236,834.96 236,834.96 235,654.50 476,745.56 476,745.56 195,038.73 427,351.20 427,351.20 152,767.82 452,136.65 452,136.65 148,165.59 130,602.27 130,602.27 54,656.25 248,123.81 248,123.81 210,186.80 61 Breakdown per Exhibit RRR-4 can be traced to supporting invoices marked as Exhibits RRR-4-1 to RRR-4- 968; Breakdown can also be seen per Annexes VI and VII of Exhibit RRR.

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 RRR-1i(2) 2/9/2010 339,359.15 339,359.15 235,425.39 RRR-1j(2) 2/10/2010 300,340.97 300,340.97 279,070.23 RRR-1k(2) 2/11/2010 236,305.32 236,305.32 RRR-11(2) 2/12/2010 458,315.03 458,315.03 83,807.05 RRR-1m(2) 2/13/2010 576,537.31 576,537.31 180,669.25 RRR-1n(2) 2/14/2010 180,214.89 180,214.89 150,193.97 RRR-1o(2) 2/15/2010 444,172.01 444,172.01 RRR-1p(2) 2/16/2010 401,711.74 401,711.74 6,177.87 RRR-1q(2) 2/17/2010 254,706.12 254,706.12 120,651.84 RRR-1r(2) 2/18/2010 545,652.17 545,652.17 121,879.22 RRR-1s(2) 2/19/2010 485,868.38 485,868.38 188,494.84 RRR-lt(2) 2/20/2010 245,857.39 245,857.39 353,120.38 RRR-1u(2) 2/22/2010 475,033.07 475,033.07 130,481.47 2/23/2010 649,669.85 649,669.85 RRR~1v(2) 2/24/2010 724,738.30 724,738.30 60,734.17 2/25/2010 426,743.03 426,743.03 110,418.58 RRR-1w(2) 2/26/2010 548,734.05 548,734.05 187,566.92 RRR-1x(2) 2/27/2010 207,947.04 207,947.04 290,573.58 RRR-1y(2) 2/28/2010 279,413.99 279,413.99 168,560.72 RRR-1z(2) 3/1/2010 152,806.09 152,806.09 169,369.87 RRR-1a(3) 3/2/2010 401,635.14 401,635.14 RRR-1b(3) 3/3/2010 402,813 .28 402,813.28 88,576.18 RRR-1c(3) 3/4/2010 564,127.95 564,127.95 48,147.93 RRR-1d(3) 3/5/2010 663,844.05 663,844.05 80,281.55 RRR-1e(3) 3/6/2010 168,732.24 168,732.24 156,760.43 RRR-lf(3) 3/7/2010 167,376.59 RRR-1g(3) 3/8/2010 49,243.35 49,243.35 170,758.62 RRR-1h(3) 3/9/2010 256,310.31 256,310.31 188,428.21 RRR-1i(3) 3/10/2010 401,856.67 401,856.67 38,707.86 RRR-1j(3) 3/11/2010 626,378.37 626,378.37 RRR-1k(3) 3/12/2010 540,494.93 540,494.93 - RRR-11(3) 3/13/2010 497,699.09 497,699.09 RRR-1m(3) 3/14/2010 129,211.77 129,211.77 71,859.82 RRR-1n(3) 3/15/2010 158,603.42 158,603.42 64,903.96 RRR-1o(3) 3/16/2010 545,326.19 545,326.19 64,354.96 RRR-1p(3) 3/17/2010 559,693.71 559,693.71 162,887.15 RRR-1q(3) 3/18/2010 419,041.66 419,041.66 220,290.86 RRR-1r(3) 3/19/2010 459,741.16 459,741.16 15,001.49 RRR-1s(3) 3/20/2010 360,486.17 360,486.17 RRR-lt(3) 3/21/2010 - RRR-1u(3) 3/22/2010 24,814.15 24,814.15 RRR-1v(3) 3/23/2010 30,120.44 30,120.44 132,162.99 RRR-1w(3) 3/24/2010 258,557.46 258,557.46 204,349.33 RRR-1x(3) 3/25/2010 264,613.31 264,613.31 RRR-1 y(3) 3/26/2010 210,341.87 210,341.87 91,083.70 RRR-1z (3) 3/27/2010 272,101.91 272,101.91 83,706.77 RRR-1a(4) 3/29/2010 648,816.24 648,816.24 66,306.98 RRR-1b(4) 3/30/2010 32,606.60 32,606.60 RRR-1c(4) 212,065.09 212,065.09 - RRR-1d(4) 147,372.51 147,372.51 - 117,183.14 99,814.26 149,422.92 160,884.26 18,641.77 32,669.25 14,348.43

RESOLUTION on Mot ion for Reconsideration CTA Case No. 8378 RRR-1e(4) 3/31/2010 25,196.74 25,196.74 16,954.94 RRR-lf(4) 4/5/2010 17,201.39 17,201.39 94,022.33 RRR-1g(4) 4/6/2010 156,555.57 156,555.57 63,782.73 RRR-1h(4) 4/7/2010 333,728.53 333,728.53 94,890.31 RRR-1i(4) 4/8/2010 265,997.49 265,997.49 45,595.83 RRR-1j (4) 4/9/2010 193,994.70 193,994.70 RRR-1k(4) 4/10/2010 563,065.52 563,065.52 - RRR-11(4) 4/11/2010 203,388.69 203,388.69 RRR-1m(4) 4/12/2010 508,243.09 508,243.09 10,219.98 RRR-1n (4) 4/13/2010 560,992.84 560,992.84 22,053.31 RRR-1o (4) 4/14/2010 328,388.67 328,388.67 169,006.74 RRR-1 p(4) 4/15/2010 702,092.62 702,092.62 86,577.36 RRR-1q(4) 4/16/2010 388,960.27 388,960.27 40,913.95 RRR-1r(4) 4/17/2010 59,763.29 59,763.29 24,206.75 RRR-1s(4) 4/18/2010 309,866.58 309,866.58 110,391.17 RRR-1t(4) 4/19/2010 33,086.45 33,086.45 22,022.41 RRR-1u(4) 4/20/2010 260,244.56 260,244.56 149,882.76 RRR-1v(4) 4/21/2010 205,150.76 205,150.76 RRR-1w(4) 4/22/2010 388,933.02 388,933.02 7,414.46 RRR-1x(4) 4/23/2010 385,876.57 385,876.57 114,631.70 RRR-1y(4) 4/24/2010 398,660.06 398,660.06 RRR- 1z (4) 4/25/2010 741,559.41 741,559.41 97,940.21 RRR-1a(5) 4/26/2010 445,892.06 445,892.06 21,054.23 RRR-1b(5) 4/27/2010 527,108.70 527,108.70 18,265.50 RRR-1c(5) 4/29/2010 959,273.14 959,273.14 37,427.97 RRR-1d(5) 5/1/2010 129,651.94 129,65 1.94 53,625.79 RRR-1e(5) 5/3/2010 130,700.27 130,700.27 112,590.17 RRR-lf(5) 5/4/2010 274,986.21 274,986.21 82,120.85 RRR-1g(5) 5/5/2010 50,791.05 50,791.05 36,640.67 RRR-1h(5) 5/6/2010 753,597.49 753,597.49 25,733.21 RRR-1i(5) 5/7/2010 556,562.77 556,562.77 RRR-1j(5) 5/8/2010 382,535.10 382,535.10 7,755.44 RRR-1k(5) 5/9/2010 25,928.84 25,928.84 84,088.57 RRR-11(5) 5/11/2010 329,383.94 329,383.94 19,423.40 RRR-1m(5) 5/12/2010 711,882.01 711,882.01 260,269.84 RRR-1n(5) 5 / 1 3 / 2 0 10 454,482.31 454,482.31 289,028.28 RRR-1o (5) 5/14/2010 368,566.38 368,566.38 88,226.13 RRR-1p(5) 5/15/2010 128,633.48 128,633.48 RRR-1q (5) 5/17/2010 356,630.40 356,630.40 - RRR-1r(5) 5/18/2010 566,229.66 566,229.66 138,349.94 RRR-1s(5) 5/19/2010 397,099.89 397,099.89 183,084.19 RRR- l t (5) 5/20/2010 178,312.89 178,312.89 RRR-1u(5) 5/21/2010 271,461.25 271,461.25 72,470.16 RRR-1v(5) 5/22/2010 169,183.18 169,183. 18 3,337.62 RRR-1w(5) 5/24/2010 190,600.52 190,600.52 RRR-1x(5) 5/25/2010 158,667.16 158,667. 16 - RRR-1 y(5) 5/26/2010 126,922.39 126,922.39 RRR-1z (5) 5/27/2010 281,684.81 281,684.81 62,057.76 264,289.93 107,950.28 14,338.67 5,836.19 1,574.09 125,287.69 99,973.87 71,443.04 105,040.72

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 RRR-1a(6) 5/28/2010 652,647.59 652,647.59 89,207.27 RRR-1b(6) 5/29/2010 170,231.79 170,231.79 60,400.90 RRR-1c(6) 5/31/2010 203,255.71 203,255.71 39,448.24 RRR-1d(6) 6/1/2010 313,955.00 313,955.00 178,446.39 RRR-1e(6) 6/2/2010 232,840.92 232,840.92 95,878.97 RRR-1f(6) 6/3/2010 571,265.11 571,265.11 116,901.76 RRR-1g(6) 6/4/2010 574,383.82 574,383.82 163,114.92 RRR-1h(6) 6/5/2010 456,325.50 456,325.50 78,665.14 RRR-1i(6) 6/6/2010 RRR-1j(6) 6/7/2010 29,644.52 29,644.52 - RRR-1k(6) 6/8/2010 321,425.21 321,425.21 R.RR-11(6) 6/9/2010 191,576.36 191,576.36 48,625.21 RRR-1m(6) 6/10/2010 503,631.99 503,631.99 27,777.47 RRR-1n(6) 6/11/2010 216,933.20 216,933.20 224,286.27 RRR-1o(6) 6/12/2010 644,887.81 644,887.81 13,707.40 RRR-1p(6) 6/13/2010 614,527.08 614,527.08 167,153.25 RRR-1q(6) 6/14/2010 232,671.34 232,671.34 77,169.24 RRR-1r(6) 6/15/2010 370,122.33 370,122.33 167,175.26 RRR-1s(6) 6/16/2010 660,269.51 660,269.51 147,238.62 RRR-1t(6) 6/17/2010 597,744.54 597,744.54 255,970.38 RRR-1u(6) 6/18/2010 691,658.02 691,658.02 162,395.95 RRR-1v(6) 6/19/2010 938,065.72 938,065.72 81,142.51 RRR-1w(6) 6/20/2010 416,687.56 416,687.56 121,438.79 RRR-1x(6) 6/21/2010 947,720.65 947,720.65 22,610.74 RRR-1y(6) 6/22/2010 429,563.66 429,563.66 222,923.39 RRR-1z(6) 6/23/2010 455,326.86 455,326.86 157,421.38 RRR-1a(7) 6/24/2010 122,512.49 122,512.49 197,064.44 RRR-1b(7) 6/25/2010 366,850.46 366,850.46 185,084.09 RRR-1c(7) 6/26/2010 430,806.35 430,806.35 154,044.12 RRR-1d(7) 6/27/2010 109,262.17 109,262.17 205,988.21 RRR-1e(7) 6/29/2010 470,354.11 470,354.11 RRR-1f(7) 6/30/2010 617,540.87 617,540.87 - RRR-1g(7) 7/1/2010 605,598.36 605,598.36 RRR-1h(7) 7/2/2010 629,667.85 629,667.85 175,674.63 RRR-1i(7) 7/3/2010 533,440.36 533,440.36 211,412.37 RRR-1j(7) 7/5/2010 210,755 .03 210,755.03 RRR-1k(7) 7/6/2010 717,712.51 717,712.51 74,164.25 R.RR-11(7) 7/7/2010 427,235.98 427,235 .98 142,183.47 RRR-1m(7) 7/8/2010 299,310.74 299,310.74 161,429.86 RRR-1n(7) 7/9/2010 338,338.20 338,338.20 131,555.84 RRR-1o(7) 7/10/2010 594,883.56 594,883.56 173,826.18 RRR-1p(7) 7/11/2010 428,939.86 428,939.86 168,394.51 RRR-1q(7) 7/12/2010 541,554.99 541,554.99 RRR-1r(7) 7/13/2010 972,413 .99 972,413.99 22,626.23 RRR-1s(7) 7/14/2010 524,805.06 524,805.06 134,236.88 RRR-1t(7) 7/15/2010 180,921.97 180,921.97 193,977.49 RRR-1u(7) 7/16/2010 299,435.56 299,435.56 41,782.26 RRR-1v(7) 7/17/2010 126,231.80 126,231.80 139,262.62 109,832.72 109,832.72 123,527.04 131,988.21 142,743.63 92,042.67 52,386.68 -

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 RRR-1w(7) 7/18/2010 261,508.82 261,508.82 163,078.82 RRR-1x(7) 7/19/2010 397,884.72 397,884.72 178,468.18 RRR-1y(7) 7/20/2010 576,639.14 576,639.14 263,204.60 RRR-1z(7) 7/21/2010 197,483.19 197,483. 19 113,636.24 RRR-1b(8) 7/22/2010 403,747.53 403,747.53 174,062.26 RRR-1c(8) 8/23/2010 230,618.81 230,618.81 76,663.86 RRR-1d(8) 7/24/2010 40,656.19 RRR-1e(8) 7/25/2010 95,692.88 95,692.88 83,577.86 RRR-1f(8) 7/26/2010 153,785.96 153,785.96 239,010.58 RRR-1g(8) 7/27/2010 259,676.54 259,676.54 RRR-1h(8) 7/29/2010 689,023.00 689,023.00 74,287.50 RRR-1i(8) 7/30/2010 313,545.07 313,545.07 218,956.65 RRR-1j(8) 7/31/2010 1,403,257.87 1,403,257.87 273,450.36 RRR-1k(8) 8/2/2010 108,264.19 108,264.19 RRR-11(8) 8/3/2010 230,339.92 230,339.92 57,168.48 RRR-1m(8) 8/5/2010 557,345.12 557,345.12 121,750.67 RRR-1n(8) 8/6/2010 471,895.06 471,895.06 231,914.65 RRR-1o(8) 8/7/2010 681,872.37 681,872.37 206,800.24 RRR-1p(8) 8/8/2010 599,243.29 599,243.29 258,736.15 RRR-1q(8) 8/9/2010 172,345.89 172,345.89 230,845.28 RRR-1r(8) 8/10/2010 507,195.45 507,195.45 120,609.51 RRR-1s(8) 8/11/2010 281,251.57 281,251.57 159,388.92 RRR-1t(8) 8/12/2010 557,557.97 557,557.97 217,749.22 RRR-1u(8) 8/13/2010 576,399.22 576,399.22 338,918.02 RRR-1v(8) 8/14/2010 721,302.85 721,302.85 269,771.85 RRR-1w(8) 8/16/2010 193,213.02 193,213.02 217,643.23 RRR-1x(8) 8/17/2010 343,381.81 343,381.81 RRR-1y(8) 8/18/2010 462,442.98 462,442.98 55,209.03 RRR-1z(8) 8/19/2010 641,102.05 641,102.05 153,067.04 RRR-1a(9) 8/20/2010 414,464.39 414,464.39 191,737.02 RRR-1b(9) 8/21/2010 477,300.93 477,300.93 231,278.72 RRR-1c(9) 8/23/2010 201,088.61 201,088.61 147,165.07 RRR-1d(9) 8/24/2010 436,311.01 436,311.01 124,007.66 RRR-1e(9) 8/25/2010 500,591.23 500,591.23 RRR-1f(9) 8/26/2010 806,578.79 806,578.79 61,982.13 RRR-1g(9) 8/27/2010 828,096.04 828,096.04 149,998.16 RRR-1h(9) 8/28/2010 1,190,866.73 1,190,866.73 171,066.66 RRR-1i(9) 8/31/2010 770,309.77 770,309.77 214,316.32 RRR-1j (9) 9/1/2010 335,537.76 335,537.76 RRR-1k(9) 9/2/2010 587,489.74 587,489.74 80,327.38 RRR-11(9) 9/3/2010 318,392.73 318,392.73 54,393.79 RRR-1m(9) 9/4/2010 256,931.30 256,931.30 158,474.39 RRR-1n(9) 9/5/2010 241,506.87 241,506.87 156,733.84 RRR-1o(9) 9/6/2010 196,839.87 196,839.87 208,120.21 RRR-1p(9) 9/7/2010 265,691.42 265,691.42 43,829.12 RRR-1q(9) 9/8/2010 829,592.21 829,592.21 15,566.77 RRR-1r(9) 9/9/2010 153,304.20 153,304.20 21,024.92 RRR-1s(9) 9/10/2010 755,830.37 755,830.37 67,472.83 966,685.12 966,685.12 154,413.56 362,378.44 142,117.94 157,337.01 105,211.58

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 RRR-lt(9) 9/11/2010 358,859.92 358,859.92 26,269.92 RRR-1u(9) 9/13/2010 839,115.09 839,115.09 163,808.24 RRR-1v(9) 9/14/2010 668,378.69 668,378.69 234,196.63 RRR-1w(9) 9/15/2010 1,316,499.76 1,316,499.76 294,786.82 RRR-1x(9) 9/16/2010 650,032.47 650,032.47 165,054.60 RRR-1y(9) 9/17/2010 574,799.03 574,799.03 137,758.84 RRR-1z (9) 9/18/2010 397,344.57 397,344.57 RRR-1a(10) 9/20/2010 170,878.28 170,878.28 61,259.00 RRR-1b(10) 9/21/2010 581,202.91 581,202.91 73,079.21 RRR-1c(10) 9/22/2010 419,035.02 419,035.02 191,802.70 RRR-1d(10) 9/23/2010 145,551.57 145,551.57 159,527.74 RRR-1e(10) 9/24/2010 457,912.96 457,912.96 63,830.75 RRR-lf(10) 9/25/2010 26,009.82 RRR-1g(10) 9/27/2010 41,735.77 41,735.77 27,434.01 RRR-1h(10) 9/28/2010 262,026.47 262,026.47 125,290.93 RRR-1i(10) 9/29/2010 295,500.19 295,500.19 14,913.94 RRR-1j(10) 9/30/2010 485,121.51 485,121.51 101,810.80 RRR-1k(10) 10/1/2010 1,210,839.09 1,210,839.09 185,734.27 RRR-11(10) 10/2/2010 330,749.70 330,749.70 73,574.60 RRR-1m(10) 10/4/2010 38,055.61 RRR-1n(10) 10/5/2010 67,666.64 67,666.64 72,558.80 RRR-1o (10) 10 / 6 / 2 0 10 245,171.23 245,171.23 93,159.50 RRR-1p(10) 10 / 7 / 2 0 10 151,795.35 151,795.35 41,076.41 RRR-1q(10) 10 / 8 / 2 0 10 339,388.97 339,388.97 113,214.02 RRR-1r(10) 10/9/2010 452,881.67 452,881.67 110,520.79 RRR-1s(10) 10/11/2010 680,942.45 680,942.45 16,926.91 RRR-1t(10) 10/12/2010 146,612.70 146,612.70 192,639.09 RRR-1u(10) 10/13/2010 531,449.68 531,449.68 158,776.64 RRR-1v(10) 10/14/2010 279,126.44 279,126.44 154,541.18 RRR-1w(10) 10/15/2010 446,651.57 446,651.57 104,178.88 RRR-1x(10) 10/16/2010 473,813.18 473,813.18 71,120.01 RRR-1y(10) 10/18/2010 257,088.47 257,088.47 33,039.16 RRR-1z(10) 1 0 / 1 9 / 2 0 10 106,738.52 106,738.52 43,280.79 RRR-1a(11) 10 / 2 0 / 2 0 10 166,202.06 166,202.06 144,278.19 RRR-1b(11) 10 / 2 1/ 2 0 10 383,573.64 383,573.64 117,974.55 RRR-1c(11) 10/22/2010 454,395.71 454,395.71 21,578.89 RRR-1d(11) 10 / 2 3 / 2 0 10 213,689.80 213,689.80 RRR-1e(11) 10/26/2010 183,722.83 183,722.83 - RRR-lf(11) 10 / 2 7 / 2 0 10 RRR-1g(11 ) 10 / 2 8 / 2 0 10 96,081.84 96,081.84 71,457.55 RRR-1h (11 ) 10 / 2 9 / 2 0 10 577,404.34 577,404.34 212,769.23 RRR-1i(11 ) 10 / 3 0 / 2 0 10 964,634.52 964,634.52 191,095.10 RRR-1j (1 1) 11 /4/2010 613,704.26 613,704.26 RRR-1k(11) 11 /5/2010 959,280.43 959,280.43 22,462.27 RRR-11(11) 11 /6/20 10 1,042,872.46 1,042,872.46 48,753.24 RRR-1m(11) 11/8/2010 754,216.57 754,2 16 .57 90,496.73 RRR-1n(11) 11/9/2010 1,041 ,090.27 1,041,090.27 89,945.09 RRR-1o(11) 11 / 10/2010 411,831.10 411,831.10 271,559.69 322,108.82 322,108.82 27,032.24 591,196.56 591,196.56 32,599.59 131,609.92 131,609.92 133,201.69 68,756.96

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 RRR-1p(11) 11/11/2010 409,737.20 409,737.20 147,309.37 RRR-1q(11) 11/12/2010 785,309.18 785,309.18 216,620.27 RRR-1r(11) 11/13/2010 361,964.23 361,964.23 RRR-1s(11) 11/15/2010 275,332.58 275,332.58 61,485.24 RRR-1t(11) 11/16/2010 231,818.90 231,818.90 35,914.36 RRR-1u(11) 11/17/2010 90,225.81 RRR-1v(11) 11/18/2010 77,395.37 77,395.37 77,395.37 RRR-1w(11) 11/19/2010 335,243.28 335,243.28 175,084.39 RRR-1x(11) 11/20/2010 846,470.79 846,470.79 113,780.31 RRR-1y(11) 11/22/2010 247,624.78 247,624.78 41,180.07 RRR-1z(11) 11/23/2010 588,293.53 588,293.53 54,288.10 RRR-1a(12) 11/24/2010 539,519.24 539,519.24 137,903.85 RRR-1b(12) 11/25/2010 475,935.42 475,935.42 97,360.49 RRR-1c(12) 11/26/2010 996,651.06 996,651.06 97,613.87 RRR-1d(12) 11/27/2010 653,437.82 653,437.82 89,033.58 RRR-1e(12) 11/30/2010 111,198.18 111,198.18 22,218.12 RRR-1f(12) 12/1/2010 55,937.38 RRR-1g(12) 12/2/2010 89,406.27 89,406.27 122,248.06 RRR-1h(12) 12/3/2010 695,213.41 695,213.41 166,552.90 RRR-1i(12) 12/5/2010 660,286.78 660,286.78 131,337.17 RRR-1j(12) 12/6/2010 868,804.55 868,804.55 17,288.42 RRR-1k(12) 12/7/2010 111,459.84 RRR-11(11) 12/8/2010 87,134.85 87,134.85 245,762.19 RRR-1m(11) 12/9/2010 498,937.82 498,937.82 269,463.58 RRR-1n(11) 12/10/2010 722,077.21 722,077.21 267,296.53 RRR-1o(11) 12/11/2010 556,729.26 556,729.26 176,031.53 RRR-1p(11) 12/13/2010 638,907.60 638,907.60 45,936.99 RRR-1q(11) 12/14/2010 302,867.30 302,867.30 134,584.17 RRR-1r(11) 12/15/2010 316,074.85 RRR-1s(11) 12/16/2010 78,200.11 78,200.11 185,399.25 RRR-1t(11) 12/17/2010 336,768.27 336,768.27 208,007.91 RRR-1u(11) 12/18/2010 862,727.23 862,727.23 132,878.70 RRR-1v(11) 12/20/2010 730,496.84 730,496.84 RRR-1w(11) 12/21/2010 777,943.92 777,943.92 5,999.08 RRR-1x(11) 12/22/2010 416,383.23 416,383.23 189,732.48 RRR-1y(11) 12/23/2010 156,369.37 156,369.37 302,200.58 RRR-1y(11) 12/24/2010 649,938.79 649,938.79 246,854.05 RRR-1y(11) 12/27/2010 760,012.98 760,012.98 121,495.11 RRR-1z(11) 12/28/2010 441,560.12 441,560.12 RRR-1a(13) 12 / 2 9 / 2 0 10 568,231.36 568,231.36 28,604.38 Total 144,215.53 144,215.53 93,733.69 420,838.92 420,838.92 186,266.64 564,746.76 564,746.76 21,988.80 p 38,561,292.43 80,304.68 80,304.68 p 136,357,111.80 p 136,357,111.80 In fine, petitioner sufficiendy proved that it paid excise taxes on removals of splash colognes and body sprays with essential oil content of not more than 3% by weight in the amount of P38,561,292.43 for the period January 4, 2010 to December 29, 201 y

RESOLUTION on Motion for Reconsideration CTA Case No. 8378 WHE REFORE, premises considered, petitioner's Motion for Reconsideration is hereby GRANTED . Our Decision dated May 6, 2014 is reversed and set aside and an AMENDED DECISION is hereby rendered GRANTING the instant Petition for Review. Petitioner is held not liable to pay the excise tax on its removals of splash colognes and body sprays with essential oil content of not more than 3% by weight and, accordingly, respondent is ORDERED TO CEASE AND DESIST from collecting the said excise tax on such products from petitioner. Respondent is also ORDERED TO REFUND or issue a tax credit certificate to petitioner in the total amount of Thirty Eight Million Five Hundred Sixty One Thousand Two Hundred Ninety Two Pesos and Forty Three Centavos (P38,561,292.43) representing erroneously paid excise taxes on non-essential articles under Section 150 of the National Internal Revenue Code for the period January 4, 2010 to December 10,2010. SO ORDERED. ~.~-0~ MA. BELEN M. RINGPIS-LIBAN Associate Justice WE CONCUR: (With ESPERANZ ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. LOVELL Associate Justice Chairperson

. ''� RESOLUTION on Motion for Reconsideration ' CTA Case No . 8378 CERTIFICATION Pursuant to Section 13 of Article VIII of the Constitution, and the Division's Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation be ore the case was assigned to the writer of the opinion oft IW"'':~�.ll Presiding Justice

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION AVON PRODUCTS CTA Case No. 8378 MANUFACTURING, INC., Members: Petitioner, � BAUTISTA, Chairperson FASON-VICTORINO, and - versus - RINGPIS-LIBAN, JJ. Promulgated: COMMISSIONER OF CJlf=- SEP 9 2014 INTERNAL REVENUE, /o . ''7C~ a. .--- . Respondent. x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x DISSENTING OPINION Fabon-Victorino, J.: With high respect to my esteemed colleagues in the majority, I vote to deny petitioner's Motion for Reconsideration thereby affirming the Court's ruling in the assailed Decision of May 6, 2014 that petitioner's splash colognes and body sprays are subject to the 20�/o excise tax imposed under Section 150(b) of the NIRC, as amended, hence, it is not entitled to the refund sought. The same was the position of the Court En Bane in CTA EB Case No. 840, 1 which involved the same parties and issues. In the said case, petitioner fervently insisted, as it does in the present case, that its splash colognes and body sprays are not subject to the twenty percent (20�/o) excise tax on non-essential goods imposed under Section 150 of the NIRC of 1997, as amended. Allegedly, these products do not fall within the definition of "toilet waters" as scented alcoholic or non-alcoholic preparation primarily used as body / 1 Commissioner of Internal Revenue vs. Avon Products Manufacturing, Inc.; January 29, 2013 .

DISSENTING OPINIOIN CTA No. 8378 fragrance containing essential oils of more than 3�/o by weight under Revenue Regulations (RR) No. 8-84. A revisit of the permutations of the pertinent laws reveals the contrary. The 1977 NIRC, specifically Section 194(b) thereof, imposed percentage tax on "toilet waters" sans definition of the term "toilet waters." To implement the imposition of said percentage tax, the BIR issued RR No. 8-84, also known as Cosmetic Products Regulations, which defined for the first time "toilet waters" as scented alcoholic or non-alcoholic preparation primarily used as body fragrance containing essential oils, i.e. more than 3�/o by weight. Examples: Lavander water, Eau de Cologne, Eau de Toilette. Relevantly, Section 1 of RR No. 8-84 states that the regulations shall cover only tax on cosmetic products imposed under Section 194(b) and (e) and Section 326 of the 1977 NIRC, thus: SECTION 1. Scope. - Pursuant to Section 326, in relation to Section 4 of the National Internal Revenue Code, the following regulations relating to the sales tax payable by manufacturers and/or exporters of cosmetic products are hereby promulgated. These regulations shall be known as Revenue Regulations No. 8-84 or the Cosmetic Products Regulations. These regulations deal with the tax on cosmetic products imposed by Section 194(b) and (e) and Section 326 of the National Internal Revenue Code, which provides as follows: Sec. 194. Percentage tax on sales of non-essential products. - There shall be levied, assessed and collected once only on every original sale, barter, exchange, or similar transaction for nominal or valuable / consideration intended to transfer

DISSENTING OPINIOIN I\ CTA No. 8378 ownership of, or title to, the articles herein below enumerated a tax equivalent to fifty per centum of the gross value in money of the articles so sold, bartered, exchanged or transferred, such tax to be paid by the manufacturer or producer. XXX XXX XXX (b) Perfumes, essences, extracts, toilet waters, cosmetics, hair dressings, hair dyes, hair restoratives, aromatic cachous, toilet powders, except tooth and mouth washes, dentifrices, tooth paste, talcum and medicated toilet powders, hair oils and pomades. XXX XXX XXX (e) Similar or analogous articles, substances, or preparations 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. Subsequently, Section 194 of the 1977 NIRC was amended by Section 23 of PD No. 1994 dated November 5, 1985 and renumbered as Section 163 which reads as follows: SECTION 23. Section 194 of the National Internal Revenue Code is hereby renumbered and amended to read as follows: Sec. 163. Percentage tax on sale of non-essential articles. - There shall be levied, assessed and collected, once only on every original sale, barter, exchange, or similar transaction / for nominal or valuable consideration intended to

\' DISSENTING OPINIOIN CTA No. 8378 transfer ownership or, or title to, the articles herein below enumerated a tax equivalent to 50�/o of the gross value in money of the articles so sold, bartered, exchanged or transferred, such tax to be paid by the manufacturer or producer. (a) All articles commonly or commercially known as jewelry, whether real or imitation, pearls, precious and semi-precious stones, and imitations thereof; articles made of, or ornamented, mounted or fitted with, precious metals or imitations thereof or ivory (not including surgical and dental instruments, silver-plated wares, frames or mounting for spectacles or eyeglasses, and dental gold or gold alloys and other precious metal used in filling, mounting or fitting of the teeth); opera glasses, and lorgnettes. The term 'precious metals' shall include platinum, gold, silver, and other metals of similar or greater value. The term 'imitations thereof' shall include platings and alloys of such metals. (b) Perfumes, essences, extracts, toilet waters, cosmetics, hair dressings, hair dyes, hair restorations, aromatic, cachous, toilet powders, except tooth and mouth washes, dentifrice, toothpaste, talcum and medicated toilet powders, hair oils and pomades. (Emphases / supplied) ./

DISSENTI NG OPINIOIN CTA No. 8378 Section 163 of the 1977 NIRC was further amended and was finally renumbered as Section 150(b) by Executive Order No. 273 dated July 25, 1987, which was enacted purposely to replace the old percentages taxes with value- added tax (VAT) as indicated in the "whereas clause" of EO No. 273. Section 150 (b) provides as follows: Section 150(b) of the NIRC of 1997, as amended, reads: SEC. 150. Non-essential Goods. There shall be levied, assessed and collected a tax equivalent to twenty percent (20�/o) based on the wholesale price or the value of importation used by the Bureau of Customs in determining tariff and customs duties, net of excise tax and value-added tax, of the following goods: XXX XXX XXX (b) Perfumes and toilet waters; Note that the foregoing provision explicitly imposed an excise tax of 20�/o, not a percentage tax, based on the wholesale price or value of the toilet waters. This imposition of excise tax on toilet waters remains in the 1997 NIRC which adopted Section 16 of EO No. 273. More importantly, Section 29 of the same EO unequivocally states that the provisions of any law, whether general or special, rules and regulations and other issuances or parts thereof which are inconsistent with the EO are repealed, amended or modified accordingly. Subsequently, the Commissioner of Internal Revenue (CIR), in the exercise of his power to interpret tax laws under Section 4 of the 1997 NIRC, issued BIR Ruling No. 043-2000 dated September 15, 2000 which was published in RMC No. 17-02, defining toilet waters, without qualification as to weight or volume, as "scented alcohol-based liquid used as perfume, after-shave, lotion, or deodorant. The Ruling provides as well that "all other colognes are, likewise, / classified as toilet waters subject to excise tax under th e/'

DISSENTING OPINIOIN CTA No. 8378 same section". To date, this BIR Ruling remains unmodified or reversed by the Secretary of Finance, pertinent portion of which is hereby quoted for easy reference, thus: In reply, please be informed that the term "cologne" which is an alcohol-based preparation is defined as follows: Cologne (toilet water) is a scented alcohol-based liquid used as perfume, after-shave lotion, or deodorant. (Hawley's Condensed Chemical Dictionary, 11th ed.) Alcohol-based is that which contains ethyl alcohol or distilled spirits as chief ingredient. In view of the foregoing, Green Cross Baby Cologne is classified as toilet waters covered by Section 150 (b) of the Tax Code of 1997 which provides - XXX XXX XXX Accordingly, all other colognes are, likewise, classified as toilet waters subject to excise tax under the same section, including Johnson's Baby Cologne which was classified as "other preparations" by BIR Ruling No. 59-81 dated March 30, 1981 and confirmed by BIR Ruling No. 535-88 dated November 19, 1988. It has been ruled that the interpretation placed upon a statute by the executive officers, whose duty is to enforce it, is entitled to great respect by the courts. 2 However, such interpretation is not conclusive and will have to be "ignored if judicially found to be erroneous"3 and "clearly absurd or improper", 4 which is certainly not obtaining in the present case. 2 Philippine Bank of Communications v. Commissioner of Internal Revenue, 361 Phil. 916, 929, January 28, 1999, per Quisumbing, J. 3 Ibid., (citing People v. Hernandez, 59 Phil. 272, 276, December 22, 1933, and Molina v. Rafferty, 37 Phil. 545, 555, February 1, 1918). / 4 Commissioner of Internal Revenue v. Central Luzon Drug Corp., G.R. No. 159647, April 15, . 2005, p. 26, per Panganiban, J.

DISSENTING OPINIOIN CTA No. 8378 The Second Division of this Court shared the same views as indicated in its Decision5 in a similar case for refund filed by petitioner involving the same issues. It further explained eloquently the legal effect of the amendments of the pertinent provisions of the law, to wit: By virtue of such enactment, the old statutory principle that only one form of consumption tax shall be imposed on sale of goods, which is either the specific tax or the sales tax, was amended. As a result, the sales tax (percentage tax) imposed under Section 194 of the old Tax Code (renumbered as Section 163 under P.D. No. 1994) was amended and replaced by Section 150, which now imposes excise tax on certain goods. Clearly, the substantial amendment of the provisions under Section 194 of the old Tax Code shows the intent of the legislature to repeal the said provisions and replace it by Section 150 of the present Tax Code. Since Section 194 of the old Tax Code (amended and renumbered as Section 163 under P.D. No. 1994), which breathed life on the questioned Revenue Regulations, had already been substantially amended and replaced by Section 150 of the NIRC of 1997, as amended, Revenue Regulations No. 8-84, which depended upon it, is now deemed to be inapplicable. Likewise, it is significant to note that an amended act is ordinarily to be construed as if the original statute had been repealed, and a new and independent act in the amended form had been adopted in its stead; or, as frequently stated by the courts, so far as regards any action after the adoption of the amendment, as if the statute had been originally enacted in its amended form. And as a rule, an amended act should be given a construction different / from that of the law prior to its ...v" 5 Avon Products Manufacturing, Inc. vs. Commissioner of I nternal Revenue, CTA Ca se No . 7873, August 16, 2011.

DISSENTING OPINIOIN CTA No. 8378 amendment, for it is presumed that the legislature would not have amended it had it not wanted to change its meaning. In this case, the NIRC of 1997, as amended, can be construed as if the old Tax Code had been repealed, and a new and independent act in the amended form had been adopted in its stead. Given the afore-mentioned purpose of the amendment of the previous laws, which is actually to rationalize our taxing system and to replace the tax on original and subsequent sales tax and percentage tax, the amended act, the NIRC of 1997, should then be construed differently from the old tax law. In fine, petitioner may not validly invoke the definition of "toilet waters" under RR No. 8-84 to justify its claim for refund. Significantly, this ruling has been fortified in a recent case for refund 6 filed by petitioner wherein the Court En Bane declared that petitioner' splash colognes and body sprays are subject to 20�/o excise tax on non-essential goods imposed under section 150(b) of the NIRC of 1997, hence not entitled to refund. In view of the foregoing ratiocination, I vote to AFFIRM the Decision promulgated on May 6, 2014. ciate Justice 6 Avon Products Manufacturing Inc. v. Commissioner of Internal Revenue, CTA EB No. 894, September 16, 2013.