CTA Case No. 1874

DECISION -

CTA CASES NOS . 1874 and 1.895 - 2 used in its logging operation s f or the period covering September 1, 1965 t o December 31, 1965 and January 1, 1966 to May 3 1, 1967, respec tively, which are now the subject matter- of C.T.A. Cases Nos. 1874 and 1895 , in the order given .• However, a 11 these claims for . refund are expected to be denied by the respondent in vi ew of his previous decis i on denying s im i lar claims of petitioner· i n C. T .f~. Cases Nos . .1569, 1674 and 1804 which were decided by this Court on AL1gust 30, 1969, now pending in the Supreme Court in G.R. No. L-31140-42.

Hence, these i nsta nt pe titions for review. The only question posed i s whethe r or not the 25/. specific ta :-:

e :.:emption on petroleum products used by forest concessionaires in their logging operations is 1 im:L ted to a period of five years from the ef ·fee: ti vi ty of Republic Act No. 1435 on June 14, 195( , or un ti 1 June 14, 1961.. Petitioner alleged in its petitions for review that the claims for refund or ' t ax credits ar• premised on the gr .. a n t accorded to it by l a w under Section 5 of Repub l ic Act No. 1435. 159 --- - and 1895 - 3 - Respondent on the other ha nd, contends that the privilege of partial tax refund granted by Republic Act No. 1435, Section 5 thereof , to those using oils in their· logging operations, 1 ike the partial ta:·: refund o ·f spec: if ic ta:<es paid on oi 1 s used in agriculture and aviation, is 1 imi ted to a period o"f five year··s , the same to be counted f r·om June 14, 1956, the date the a ·for··esaid Act took effect.

Consequently, fuel oils used in such concessions after June 14, 1961 are subject to the full specific tax prescribed in Section 142 of the Ta~·~ Code.

Sinc:e petitioners' pur·chases and consumption of petroleum products we r·e made from September 1 to December 31, 1965

( CTA

Case No.

1874) and fr·om January 1, 1966 to May 31, 1967 (CTA Case No.

1895) th(?n they ar·e not covered by the privilege granted under Section ~::.

o ·f Republic Act No. 1435.

On the basis of the pleading s and the CTA records the par·ties agreed to s ubmit these cases for decision.

· The law made to be applicable in these cases 160 and 1895 - 4 - is Republic Act No . 1435 involving Sections 1 and 5 of the said Act which We quote hereunder: SECTION .l.

and forty-two of Revenue Code, as amended to read as Section one the National amended, is follm'ls:

hundred Internal fur-ther 11 SEC. .142.

Spec i ·f ic T a:< o n m<:mufac tured oils and other· fuels. On refined and manufac tured mi nera l oils and motor fuels, t here shall be col l ec ted the fo I lowing ta:<es:

" (a) Kerosene or petrd 1 eurn, per liter of volume capacity , two and one- half centavos;

11 (b) Lubr-icating oils, per lite r ' of volume capacity, seven centavos; "(c) Na pi:ha, gasoline, and al l other si mi lar products of distillation, per l iter of volume capacity, eig h t centavos ; and "(d) On denatured alcohol to be used for motive power, per liter of volume capacity, one cen t.avo: Pr·ov ided, That •i f the denatured alcohol is mixed wi th gaso 1 i ne, the s pecific ta:·: on which has already been paid, only t he alcohol conte nt s ha l l be subject to the tax herein presc r .i bed. For the pur-pose ' of this su bsection, the removal of denature d alco hol of not l ess than on e hundred eighty degree s proof (nim~ty per centum absolute a l c ohol) shall be deemed to have been removed for mot ive power, · unless shown to the contrary. "Whr-::>nevet- any of the oi 1 s mentioned above are, d uring the five years from June 18, nineteen hundred a nd fifty two, used in agric:ultl.tr·e and a viation, fifty 161 --- and 1895 -- - 5 - per centum of the specific thereon shall be refunded Collector of Inter·nal Revenue submission of the following: · ta){ by Ltpon paid the the "(1) A sworn .:dfidavit of the producer and two disinterested persons proving that the s aid oils were actually used in agriculture~ or in lieu thereof. "(2) Should the produce r belong to any producers' association or federation, du 1 y r·eg is tered with the SP.c:ur i ties and Exchange Commission, the affidavit of the president of the association or ·federation~ attes ting to the f ac t that the oils were actually used in agriculture.

"(3) In t he case of aviation oils, a sworn certificate satisfactory to the Collector proving that the said oi ls were actually used in aviation:

Provi ded, That no such refund s shall be granted i n respect to the oi 1 s used in aviation by citizens and corporations of foreign countries wt1i c h do not grant e qui vc:t lerit refunds or exemptions in r espect to similar oils used in a viati on by c itize ns and corpor~:~ticms of the Phi l.i.ppines." SEC. 5.

The pr··oceeds of · the additional tax on manufactured oils s hall accrue to thE! road .:md br·idge ·funds of the po 1 i tic a 1 s ubdivision for whos e benefit the~ ta:·: is collected: Provided~ however, That whenever any oils mentioned above are used by miners and fores t concessionaires in their operations, twenty-five per· cen turn of the specific tax paid thereon shall be refunded by the Collector of Internal Revenue upon s ubmission of proof of actual use of oils and und :"r simi 1 ar c ond i ticms r-mumer~ ated in sub·- I-· lr·a g raphs one and two o f section 162 ------~~~--· -~ ~ -

DECISION -·

and 1895 of - 6 -- one her-eo·f, a!Tlending section one hundt'·r?d forty- two of the Internal Revenue Code: Provided, further, That no new road shall be constructed unless the routes or location the reof s hall ha v e been a pprove d by the Cornmi ~;sione r· of Public Highways after a d €-?terrnination that such road can be made part of an integra l a nd ar·ticu 1 a ted rc1u te in the Phi 1 ippin e Highway System, as r-equired in section twenty-six of the Phil ippine Highway Act of 1953 .

(emphasis ours) We reiterate our previous ruling in the cases Atlas Consolidate d Minin g an d De velopme nt Corpor·ation vs. Commissioner of Internal Revenue, C.T.A. Cases Nos. 1638 and 1708, d ecided on August 15, 1968 and t:I'1S L ogging~ Inc. vs. Commissioner of Internal Revenu e~ C.T.A. Cases Nos. · 1569, 1674 and 1804, decid e d on August 30, 1969, where We said : v" The par-t.i a 1 re ·fund of speci fic:

ta:-:es paid for oi 1 s used in ag r icu 1 tur-e and aviation, during a limited period, appears in Section 142 of the Revenue Code while t he partial refund of s peci fic tax paid for oils used by mi ne r s and fore s t concessionaires, without limitation as to ti me. is in Section 5 of the Act.

(To judg irom their· placement and their tenor, . they are c learly disparate provisions.~ We cannot find a ny pl a us ible reason for reading the limitation of the operative per i od provided fo r oils used in agr i cultu re and aviation into t he provision on the refund to miners a nd forest concess ionaires.

Note that Section 5 of the Act has t o prov i de expre5s ly that the procedure for 163 ww ., .. , ---·-- · - DECISIOf\1 - and 189 ~5 r-efund pr-ov ide~d of Section 142 app 1 icab 1 e to - 7 - in subpar-agr-aphs 1 and 2 of the Revenue Code ar-e refunds to mine r-s and for-est concessionair-es otherwise it would be deficient on this point since the pr-ovisions in Section 142 of the Revenue 1 Code ar-e not supposed to supp 1 ernent the d e ficiencie s in the provision gr-anting par-tial refund to miner-s and for-est concessi Lnai tres .

Need 1 ess to say this e:-:pr-ess r-efer-ence to Section 142 of the Revenue Cod~? cannot be e:<panded in tenc>r- and scope to include things n o t stated ther-ein~ like the 1 imi ta ticm .~s to the oper-ative pe r-iod of the refund. The debates in Congr-ess in conrH·?C tir.m with Republic Act 1435, t he per-tinent excerpt of which we are quoting hereunder-, ar-e elucidating: Thus , we see from the for-egoing excerpt that 4 he reason for the re fund of specific taxes paid when oil for fuel a nd lubr-ication is usecf in agr-icul tur-·e and a - viation is differ-ent fr-om that advan c ed for- the gr-ant of similar t=wivileg~~s to miner-s and fot-·est c oncessionaires . With r-espect to the first the pur-pose is to foster agricultur-e and aviation for a l.im.i ted p~? r.iod.

As for the sr:~co nd the r-eason adv ~•nc~:!d i s that the miner-s and for-es t concessionair-es , from the very na tLwe of t heir· .inclust r .ies, whi c h, · par-enthetically, is of per-manent char-acter-, do not use public r-oads as often as other user-s and to place on them equal burden in the maintenance of road s and bridges transgresses on the sense of fairness of Congr-ess.

Based on fundamentally differ-ent r-easons as they 164 ,,

DECISION -·

and 189~;

-· - - 8 ·- at-e~ it is not at all s u r pris i ng that the privil e ges of one has different conditions from those of the other." ~ In view of the foregoing~ We therefore see no va 1 id and compe 11 i n~J reason to deviate from s aid ruling .

t

WHEREFORE, thE~ instant petitions for r ev .iew filed by petitioner are he re by GRANTED. Respondent i s her·eby or·der·ed to refund or g n:m t a ta}: cr·e dit in favor of peti tioner the s ums of P3~358.20, corres pond i ng to the period fro m September 1~ 1965 to December 31, 1965 in C.T.A. Ca se No. 1874; and P14,876.56, corr·espond i.ng to the period from January 1~ 1966 to May 3 1, 1967 iM C. T . A. Case No . 1895, representing s pecifi c t.a:-:es paid on the purchases of petroleum products used in its for e st operations.

Without pronounce ment as to costs .

WE CONCUR:

Assoc i <:\ te ,Judge· -· 9 - C E R T I F I C A T .I 0 ~ I hereby certify that this dec i sion was reached after due consu ltation a mong the members of the Court of Ta x Appeals in · accordance with Section 13. Arti c l e VIII of the Constitution. - ..

F'residi g ,Jud ge Court of Tax Appea ls 166