Casco Chemical Co v Gimenez

Casco Philippine Chemical Co., Inc. (Casco) was

engaged in the production of synthetic resin glues used
primarily in the production of plywood. The main
components of the said glue are urea and
formaldehyde which are both being imported abroad.
Pursuant to a Central Bank circular, Casco paid the
required margin fee for its imported urea and
formaldehyde. Casco however paid in protest as it
maintained that urea and formaldehyde are tax exempt
transactions. The Central Bank agreed and it issued
vouchers for refund. The said vouchers were submitted
to Pedro Gimenez, the then Auditor General, who denied
the tax refund. Gimenez maintained that urea and
formaldehyde, as two separate and distinct components
are not tax exempt; that what is tax exempt is urea
formaldehyde (the synthetic resin formed by
combining urea and formaldehyde). Gimenez cited the
provision of Sec. 2, par 18 of Republic Act No. 2609
which provides:
The margin established by the Monetary Board pursuant
to the provision of section one hereof shall not be
imposed upon the sale of foreign exchange for the
importation of the following:
xxx

xxx

xxx

XVIII. Urea formaldehyde for the manufacture of

plywood and hardboard when imported by and for the
exclusive use of end-users.

Casco
however
averred that
the
term
urea
formaldehyde appearing in this provision should be
construed as urea and formaldehyde. It further
contends that the bill approved in Congress contained
the copulative conjunction and between the terms
urea and, formaldehyde, and that the members of
Congress
intended
to
exempt
urea
and
formaldehyde separately as essential elements in the
manufacture of the synthetic resin glue called urea
formaldehyde, not the latter a finished product, citing in
support of this view the statements made on the floor of
the Senate, during the consideration of the bill before
said House, by members thereof.
The enrolled bill
formaldehyde

however

used

the

term

urea

ISSUE: Whether or not the term urea formaldehyde

should be construed as urea and formaldehyde.
HELD: No. Urea formaldehyde is not a chemical solution.
It is the synthetic resin formed as a condensation
product from definite proportions of urea and
formaldehyde under certain conditions relating to
temperature, acidity, and time of reaction. Urea
formaldehyde is clearly a finished product, which
is patently distinct and different from urea and
formaldehyde, as separate articles used in the
manufacture of the synthetic resin known as urea
formaldehyde.

The opinions or statements of any member of Congress

during the deliberation of the said law/bill do not
represent the entirety of the Congress itself. What is
printed in the enrolled bill would be conclusive
upon the courts. The enrolled bill which uses the
term urea formaldehyde instead of urea and
formaldehyde is conclusive upon the courts as
regards the tenor of the measure passed by Congress
and approved by the President. If there has been any
mistake in the printing of the bill before it was certified
by the officers of Congress and approved by the
Executive on which the SC cannot speculate, without
jeopardizing the principle of separation of powers and
undermining one of the cornerstones of our democratic
system the remedy is by amendment or curative
legislation, not by judicial decree.