l't!-~tmuc Ol? "Hfl! ~·t IUP'Pt:·n·~· t..:OURT OF TAX. AF'f'i:.:AL~ Q;l.l~.o~ CH'Y Zt'\MBOANGP, vJOOD PHODUCT S, INC vs. COMMISSIONER OF INTERNAL REVENUE, Hespondento XM<>-~-~ -u~~·· --- ·--.... _....... -.,., - ·- ---.. --~---"'"X D E C I S I 0 N This is a claim for partial TAX refund in the sum of 8832,900~10 as specific tnx paid on oil productr used i n mining operations pursuant to th e provj s ions of Sect i on 5 of Republic Act No. 1435. During the period from July 1, 1980 to l·~ny 51, 1'J82 vs. purchased from Mobil Oil Philippines ln c. ref i ned a nd manufactured mineral oils, et al.

DECISION -

- 2 - impos ed under Sections 153 and 156 (formerly Section s 142 and 145) of the Tax Code of 1977, on th e ref i ned .. and manufactured mineral oils, motor fu e l and die. e l fue l o i l s whic h it sold to peti ti oner. That in ac cordance with the provisions of Section 'S of Repu blic Act No . 14 35 a nd the de ci s ion of the Supreme Court in L~~';!_,las_~.f-~-- v. Court of Tax 0.£E..~~!~ (lOt~ SCRA 718) , pe ti t ioner f i l ed wit h the respondent on Se ptember 23, 1982 a written claim for r e fund of the amount of e 83 2,900.10 (Exh. A), representing t went y-fi ve percent (25%) of the specific taxes coll ected on th e refi ne d and manufacture d mineral oil s , motor fu e ls, and diesel fuel that petitioner utilized in its operations as fore s t concessionaire during the la s t two years from July, 1980 to May , 198 2 .

In support of said cla im for refund, petitioner had s ub mitted to respond e nt t he affida vits of the Pr esi dent Rob e rto Reyes of th e Ph ilippine Wood Products Ass ociati on, I nco, and o f four disinterest e d persons , namely, Romeo C. Yango, Ma na lo de Asis~ Romela c. Mosqueda and Dominador S.P. Lopez, attesting to the fact th at the refined a nd manuf actu red mineral oil s , motor fuels, a nd di esel fuel oil s th at \ 23 :1 ~ -~··----··-- .0-• W ....... _ __, __ .. ___ ,~··--_ ........

# ........... ,_.._._, ........... _

I '

- 3 - petition e r purchased from Mobil Oil Philipp i ne s , Inc o were actually and exclusively use d in t he exploitation ~ .

and operation of it s fore s t concession . (E xhs . A, A-1, · to A-5).

From the ti me the claim fo r refund was filed on September 23, 1982, up to the time the pres ent petition for r eview was fil ed by petitioner on October 8, 1982 , no action was tak e n by respondent Commi ss ioner of I nterna l Rev en ue until over a year af t e r th e filing of the petition for r e view, o r on Janunry 30, 1984 (E xh. GA) when the cla im for r efund was de nied by said res- pendent Commi ss ioner of Internal Revenu e$ Said let te r of deni a l i s quoted hereunder in full for a more concise appre ciation of the basis f or re jection of petitioner 9 s claim f or r ef und.

Carpio, Vill ara za, Ba rza,

Cruz & Hosell

LTA Building, 118 Pere a Street Lega s pi Vill ag e Makati, Metro Manila

Gentlemen:

Jan uary 30, 1984 With r e ference to the claim filed by you for and in ~ehalf of your cli e nt , ZAMBOANGA WOOD PROD UCTS , INC ., \ 240

()[CISION -

~- 4 - ,r · fo r r efu nd of e832,90Dol0 as all eged over paid s pecific tax on the petroleum prod ucts used an d/or consumed in its lo gging operations during the period f rom July, 19 80 tq May , 198'2, I re gret to in f orm you that after at, careful study, this Office find s no cogent, much less justifi able reason to favorably consider the same . It appears that your c laim is principally anchored on the provisions of Section 5, Re public Act No . 1435 which authorize the refund an d/or the cre dit of 25% of the specific tax paid on the petroleum products used in logging or mining operatj.onsG Said provision s hould how e v~r, be read in conj unc tio n with the provision of Section· l+ of that law ..

It is our vi e\>~ that in o1der to avail of the benefits of partial tax refund mentioned in said Act, there must also be a municipal or city ordinance which imposes an additional tax of not exceed- ing 25% of the regular specific tax levied under Sect ion s 142 an~ 145 of the Tax Code, in the place of yo ur operatio ns.

In oth er words, refund wil l a ri se only after t he enactment of the munici pa l or c ity orMinance l ev yin g the additional ta x and the su bse qu ent payment of the tax in question.

In fine, it i s no lo nger th e national tax that is being re fun ded but only the 25% l ocal add i tional tax o With the issuance however, of Preside ntial Decree Nos. 231 and 426 dated Ju ne 28, 1973 and March 30, 19 74» respec tive ly , cities and munici pal i t i es can no l onge r levy any additional t ax on articles subject to the s pecific tax.

Consequen tly, and as the refund sought entirely depends on the exercise of such powers, pa rtial ref und of specific tax payments on the f uel oils used in logging or mining can no longer be aut horized . The enactme nt of Pre s idential Dec ree No. 711 which took effect on July 1, 1975 furth e r bolstered our stand on the matter becau se that Decree abolished all s pe cial and fiduciary fun ds o Sinc e R.A. No . 1435 was precisely passed by Congr ss to provide the means of increasing the Highway Special Fund, said De cree has in effect repealed said R.A. No . 1435 he nc e, the sam~ can no longer be invoked a~ th e ba s is for instituting claims f or refund of alleged overpaid specifi c t ax .

I

\ 241

- 5 - ,.

In view thereof , the c laim of your c l ient, for refund of the said s um of 2032~900 . 1 0 s!1ould be as it i s , hereby denied.

Thi s cons t it ut e th e fin· 1 decision ~ .

of this Office on the ma t ter. Ve ry truly yours, RUBEN B. ANCHETA Acting Co mmi ss i oner

On October

8~ 19 82 aforesaid, petitioner filed its petition for re iew allegir1g th e foregoing facts, wh ich materi~l allegations we re adnitted by responden t in his answ~r and we re suprorted by ev id ence pre sented during the he ar ing.

The evidence adduced during the t r ia l of this case sh ows that pe itioner, form e rly t he As sociated Invest- ments Co~ , Inc. (E xh. D, Aff idav it of filing ame nded articles of incorporatio n ) , i s a domest i . corporation engaged for seve ral years in th e busir1ess of lo gging and duly licensed to cut, co l lect and r emove timb er from its forest co nce ssion area located in lpi], Zamboanga de l Sur.

(Exhs. B to B-9, C and D.)

During th e period from July 1980 through May 19 82, petitioner purchase d f rom MOBIL various quantities of refined and manu facl urerl \ 242

DECISION

·~ CTA CA SE NO. 3522 / ~·· - 0 ~ mineral oil s , motor fu els and diesel fuel oils (Ex hs. E to z, AA to zz, AB to AZ, BA to BZ, CA to CZ, DA to .. DZ, EA t o EZ, FA to FB - R-a and their sub-exhib it s ), which it ac tua lly and exclusively used in connection with the exploitatio n and operations of its forest concession (Exhs. A-1 to A-5; TSN, Febr uary 28 9 1983,

p. 5) and to run its va1.' 1ous machineries , equ :ip ments~ motor vehicles (E xh. GD).

For the various oil products pur chased by pe t i- tione r , MOBIL paid th e specific taxes imposed under Sectio ns 14 2 and 145 of the 19 39 Nat:ionr1l Internal Rev e nue Co de (Sees. 153 and 156 of th e 1977 Tax Code) and passed on the same to petitioner which were made part. of the purch nse price (Exh .. GC). The monthly summa r y of purchase~ (Exh~ GB) and th e tax payme~ts for dies el fuel oil and gasoline1are as rollO\•IS:

D I E S E L

·-- ·-·-- -s p["Ci F IC

G A S 0 L I N E

----···-·-···-s·r"E c rn-r 19 80

JUNE

JULY

LI TERS

TAX PAID

51 2 ~li 00

52ByL}QQ

B 35,B68 36,988 1 r~e speci.~ic tax rates during th e p~riod in question was eo.70/lite r for diese l and 20.175/liter for gasoline.

\ L.ITLRS 50, 000 so,nno

Tf\X PAID

e s,75D 8 ,7 50

DECT STON

RTA CASE NO.

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

TOTAL

A981

JANUARY

FEBRUARY

MARCH

APRIL

MAY

JUNE

JULY

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

TOTAL

1982 - et ere

JANUARY

FEBRUARY

MARCH

APRIL

MAY

TOTAL

GRAND TOTAL

=m ere 961 PORN OT AS FOO EE FREER ER 614,000 630,000 550,000 230,000 419,000 5 74 4, 80C 500,600 480,000 502,069 599,000 535,000 464,400 599,600 321,200 477,900 280,000 490,000 1,090 ii, 270 000 989 44,100 38,506 16,100 ob] 700 B42, P2434!

19,600 34,300 B39 ? 8 2244 Po19,600 ol, AN 5255 At 20, 3G crease:

Flare

E788.

499,

B00

420 ,F O01, 50,000 50,006 50,000 30,000 40,000 220 000 50,000 306,006 48,000 60,000 52,606 et 400 28, BNO 39 900 20,000 40,000 » 200 30,009 34 ,O0G 50000 40,000 iB 2 C09 194,000 O13, 200 emcee cena a erm ARE EHTS BON INRA EER dear tem orem Mine iucsarsprien Dah

SPECIFIC

TAX PAID

seins anetenvtrnaest et 2.8,750 6, 750 8,750 5,250

a BD

£26,000 28,750 2250 , 400 Lo soe 9,170 10,255 7,420

5 G40

G p20 By 50 {)

7) C00

52250 P87, 360 loenmnnataeUbe nH te wanes 2B 5,250 5.958 67750 7,000 rene! OOO B33. 2220 E477, 310 Ramen Amtoreen yeni sera?

~----~------------.,---=-=--~·.;,_-:...::_ ~ -----.. - .... -· .......... --... - .... ..-~.-"" .............. .-..-... .. -.....-w-------........----~

DECI SIO N -

- 8 - On the other ha nd, the total number of liter s of lubricating oils purchased an d used during t he period '· was 751,648 liters, for which the amount of specific tax paid at th~ applicable rate of eo.BO/liter was E601,318.,4Do In other words ,the grand total of spe- ci fic taxes pa id during the period was 81,567,528~40, 25% of which is now sought by petitioner to be refunded aforesaid in the sum of e832,900Ql0 1 under Section 5 of Republic Act No. 1435, known as an Act to Provide Means for Increasing the Highway Special Fund. Respond e nt did not pre s ent any evi de nce against th e accuracy of the actual spe cif ic ta xes paid on the diesel, gasoline, lubricating oi l an d o t her oils used by petitioner during the period in question o The only issue to be resolved in thi s case is whether or no t petitioner is enti tled to th e refund o f the 25% of th e sp ecific taxes coll e cted and pa id on fu e l oil con sump tion as a forest concessionaire as pro vi ded in the a f o r·e s a i d Sec t ion 5 o f R e p u b 1 i c A c · 14 3 5 in th e amo un t of es32,9DO ~ IO.

\ ,,

Q

245

- 9 - .~· ' Petitioner conten ds that it i s entitled to the refund of twenty-five pe rce nt (25%) of the specific ta xes it paid on the petroleum prod ucts it purchased a nd actually u se d in the exploitation a nd operations of its for est concessiono It asserted th a t under the said Section 5, Republic Act NoQ 1435, it provi des tha t ~, The proceeds of the additional tax on manufac ture d oils shall accrue to the road and bridge funds of the politic a l subd!vision for whose benefit the tax is collected:

Pro-

vided,: .however. That whenever any oi l s ~ioned abov ~ are used by miners-·ar-fo re st co n c e s s i o n a i r e s i n t h e i r o p e r at i o n s ~ t w_e n t l:_- _five. ner ce~um of tt~,£..c,)f:i.c tax pai9. t h e r e C?.Jl....§..h a lU e r. e f ~-!.El.~..9_..E.i....Jh!:_ C o ].~ e c tO_£ of Inter n_?l Rev eny .~:._J:!.P._~S ubmi ss ~5~.D.......2L.f?.roo f of actual use of oils ·and under similar con- dition enumeratedTi1subparagraphs one and two of Section o ne hereof, amending section one hundred forty-two of the Internal Revenu e

Co de:

Provided, f ur ther, That no new roa d s hal l bec-oriS""f"ru c ted- ·unless the routes or l ocation thereof shal l have been approved by th e Commis sioner of Public Highways afte r a determination that such ro ad can be made part of an integral and articulated rou te in th e Phili ppi ne Highway Syst em , as required in section twenty-six of the Phi lippines Highway Act of 1953.

(!J.r~derlin i._n_g g_!:!._E~_ .

) The "oils mentioned above , " ref e rred to in th e proviso of the fo rego ing provi s ion, are those mentioned in Sec ti ons 142 and 145 of the 1939 National Interna l

I

Reve~ue Code, and which were amended by Sections 1 and \

DECISION

·~

CTA CASE

NO~ 3522

- 10 - 2 of Republic Act No . 1435, respectivelyc At the time material to this case, said Sections 142 and 145 became Sections 153 and 156, respectiv ely, of the 1977 Natio nal Internal Revenu e Code o Dur i ng the period involved iri this case, the provisions of aforesaid Secti ons 153 and 156 are as f ollo~tJs:

SEC . 153.

Specific tax_...£.1]__manufactured oils and other fuels.

On refined and manu- factu'red minel.::"al(iTI's and motor fuels, there shal l be collected the following taxes which shall attach to the articles hereunder enu- merated as soon as they are in existence as such:

f~) Kerosene, per liter of volume capac y, seven centavos;

(b) Lubricating oils, per liter of volume capacity, eighty centavos;

(c) Naphtha, gasoline, and all other similar products of distillation, per liter of volume capacity, ni nety-one cen t avos; Provided~ That on premium and aviation gasoline, the tax shall be one peso per liter of volume capacity;

(d) On denatured alcohol to be used for motive power , per liter of volume capacity, one centavo; Provided, That unless otherwise provided for by special laws, if the denatured alcohol is mixed with gasoline, the specific tax on which has already been paid~ only the ' alcohol content shall be s ubject to the tax herein prescribed~ For the pu rposes of th is subsecti on, the r emoval of de natured alcohol of not l ess than 180 degrees proof (90%) absolute alcohol) shall be deemed to have been removed for motive power 9 unless s hown to the contrary;

(e) Proces sed gas, per liter of volume capacity, three centavos;

(f) Thinners and solvents, per liter of voll\me capacity, fifty·-seven centavos;

(g) Liquefied petroleum gas, per kilo- gram, fo~rteen centavos; Provided, That li- • ~ quefied petroleum gas used for motive power 24!( ~ .

·~ 11 ·~ shall be taxed at the equivalent rat e as the specific tax on ~lesel fuel oil;

(h) Asphalts, per kilogram, ei qht centavos;

(i) Greases, waxes and petrolatum 9 per kilogram , fifty centavos;

(f) Aviation turbo jet fuel~ per liter of volume capacity, fifty-fiv~ ce ntavos e (As amended by Sec. 1, PoD< No., 1672 .. ) sEc • 15 6 ., ~-i ~l.:: .. _t..~.f __ l:?..'2.._.5i~L.!:~.~E~LE~.~L oil.

- On fuel oil, commercially known rs diesel fuel oil , and on all similar fue1 oil s ~ having more or le ss the same generating power, per liter of volume capacity, seventeen and one -11 a 1 f c e n t a v o s , \li h i c h t a x s h a 11 D t t a c h t c to this fuel oil ~s soon as it is in existenbe as such.

According to the lav.t 1, said R.A. NaG lL~55s the refund shall be made out by the respondent upon submission of pro·Jf by the miners or forest concessionaires of the actual use of oils and under similar conditions presc ribed in subparagraphs one and two of Section 1 thereof$

These

req uir ements are the f ollowing:

(l) A sworn affidavit of the producer and two disinterested persons proving that the said oils were actunlly us ed in agri- culture, or in lieu thereof.

(2) Should ' the producer belong to any producers association or federation, duly registered with th e Securities and Exchange Commission, the affidavit of the presid e nt of the federation or association, att es ting to the fact that the oils were actually used 1 :i.n agriculture.

24o

DECISION -

CTA

C~SE NOu 3522

.. 12 ...

..

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

Provided, lhat no such refunds shall be granted in respect to the oils used in aviation by citizens and corporations of foreign ~ountries which do not grant equivalent refunds or exemptions in respect to similar oils used in aviation by citizens and corporation of the Philippines~ In the present cas~, petitioner had complied with the pertinent requirements of Section 1 of R.A. No$ 1435o Petitioner had shown, and it is not disputed, that it is a duly licensed forest concessionaire and that it actually purchased nnd used various oil and petroleum products during the period July, 1980 through May, 1982.

And petitioner had filed on September 23, 1982 its claim for refund of 25% of the specific taxes it paid for various petroleum products it purchased and actually used during that periodo (Exh. A)a It ~up- ..

ported its claim by the sworn statements of its President (Exhg A-2 to A-5) and of the President of the Wood Products Association of which it is a member, which prove without doubt that the oils were actually used in the operation of its forest concessionr and which were admitted by respondente

Consequently~ with the

compliance of the requirement of law, the issue at bar \ - .

24 3

- 13 - is ripe for disposition and which is not without a pre- cedent.

On the basis of the decision of the Supreme Court in case of Insular Lumber Co., vs. Court of Tax Appeals, G. R. ·L-31057 and L-3ll37r promulgated on May 29, ~981, cited authoritatively in the decisions of the Court of Tax Appeals in Atla3 Consolidated Mining and Development Corporation vs. Commissionet' ot Internal Revenue, C.~.A. Cases Nos. 2964 and 29/lf dated November 28 , 1986 and March 31, 1986, respectively , we hald, in effect, in the former that petitioner therein is entitled to refund ~f the 25% of the specific tax on the oils used by it, which we quote:

"This issue is not one ot f irst 1mpression. In the case of Atlas Consolidated Mining and Development Corpora tion vs . Commissioner of Internal Revenue, CTA Case No. 2971, dated March 31, 1986 , involving the same parties, this Court ruled:

Resolv ing the question squarely in the Insular Lumber Case involving as it does se-c.t1orl5-o"fR.A 'No:- 1435, the supreme court held:

\ "Based on the aforequoted p rovisions, it is very apparent that the partial refund of specific tax paid for oils used in agri- culture and aviation is l im ited to five years while there is no time limit for the partial refund of specitic tax paid for oils used by m1ners and forest conc e ssionaires . We find no basis in applying the limitation 250 ·- 14 - of t he ope rative period provided for oils used 1n agriculture and aviation to the provision on the ~.

refund to miners and forest con- cesaionaires.

It should be noted that Section 5 makes reference to subparagraphs l and 2 only for the purpose of prescribing the proce- dure for ref1nd.

This express reference cannot be expanded 1n scope to include the limitation ot t he period of refund.

If the limi- ta ion of the period of refund of spec ific taxe~ paid on oils used in aviation and agricu l ture is intended to cover simi l ar taxes paid on oil used by nrners and forest concession-- aires , there would have been no need of dealing with oil used by miners and forest concessions separ~tely and Section 5 should very well have been included in Section l ot Republic Act No. 1435 , notwithstanding the differe t rate of exemption."

(Commissioner of

Internal Revenue v. Coutt of Tax Appeals and Insular Lumber Co. No. L-31131, May 2Y, lYBl~ 104 SCRA 718) .

Just so and aptly enough the ruling lends settling eloquence to the precise issue raised in the ins t ant case.

The apparent patina of cogency i mpressed nonetheless, the respondent Commissioner of Internal Revenue's amended answer urged new fillips towards faulting the petitioner's right to the claim by alleging that the partial tax refund privilege ceased upon the issuance of either any of the decrees, to wit: \ l .

PD 314 - Increasing the rates of specific taxes on fuel oils on Oc~_ .. ?Ot. 1973: or

DtXISION -

CTA CASE NO. J52L ·- 15 - ~.

PD 231 as amended -

Enactment of the Local Tax Code on

J\.1!_~ ___ 2 8 1 19 7 3; or 3.

PD 711 - Abolishing the special and fiduciary funds on !!..~0..:-Y . ..l.' 197?..> or 4.

PD 1158 and PD 1158-A - Consolidating

and codifying ell 1nternal revenue laws on 9"...Y.I:.Ll.t. 19 7..1. Again we are unable to give due assent to such riposte.

Respondent would have substituted a quirk of alternative expediencies falling sharply at odds with the compelling rationale of the grant, "That these lumber and m'ning com- panies seldom m>e the national highways because they have their own roads, they have their own compounds.

xxx So that if they are not entitled to the benefit of this law it will be unfair if they will be required to pay."

(Congressional

Records, 3d Congress, 3d Regular Session, May 7, 1967 , Vol. III, No . 67 pp. 2093-2107). Far be it from a theoretical gobbledygook, the tax privilege extended the minersjforest concessionaries (Sec. 5, RA 1435) vis-a-vis agriculture and aviation (Sec. 1 ibi~) could not have bee n intended for a very limTted contingency and application. Nowhere here nor there · re such legal constraints of an express repeal much less effective curtailment of the operative effects of the provis4 of Section 5.

It certainly did not appear to matter whether the above-mentioned decrees, either, increased the rates of specific taxes; or withdrew the local governments' power to levy and collect additional specific taxes; or abolished the special and fiduciary funds; ,, or consolidated and codified all the internal revenue .laws.

It does not make us wonder therefore that the import and force of Section 5 had been left precisely as was then contemplated to the \ - -

DECISION -

CTA CASE NO . 3522 - 16 - extent that the partial tax refund accorded tne miners and forest concessionaires rema 1ned obtaining.

Neither was there an attempt to undo with the terms and conditions of the tax concession upon which a claim for entitle- ment may be exercised subject to the com- pliance the statutory requisites, i.e., "submission of proof of actual use of oils and under similar conditions enumerated in subparagraphs one and two of Section one hereof."

As had happened in the case at · bar, the records make it clear that insotar as the same 1s brought to bear upon the circums t ances, the evidence adduced justi- fiably asserts compliance therefor, viz.: 1) Sworn certification of supplier Petrophil Coiporation as to the quantity of extra g gasoline and diesel fuel purchased (Exhs. "A" and "A-1" ) upon which tacked the receipts of payment of specific taxes (Exhs. "D", "E", "F", "F-1" to "F-28", "G", "G-1" to "G-·93" , "H", " I", and "Bulk Invoice s ") and 2)

Affi-

davits of the petitioner's Vic~ President duly confirmed by two disinterested p e rsons (Exh . "C") and the Chamber of Mine s of the Philippines' President (Exh. "B") attesting to the actual use of the fuel oils in the mining operation for the period from October# 1976 to April, 197U.

So i t appe . rs and we so hold that the petitioner has fared cons1stent with the mandate of the law.

XXX

XXX

XXX

xxx, petitioner argues that the right to refund depends on the date o f use by the pur- chaser, not on the date of payment by the importer (supplier), the Mobil Oil Philippines. Indeed, this positicin finds conformity in ' the Supreme Court's observation in the case of Commissioner of Internal Revenue v s . Court of \ 253.

....

• ~- - ··-· ·- -- - .. - --~~ ·-··~··- ._ .... ~- .... - -- ..... - ....... ,, ~ ..... . _ . _ .._ ..............

. ....... . . ~- - ··-·-··-.... --.................... . ~ .... ....... u •••

DECISION -·

CTA CASE NO. 35L2 - 17 ~ .r· Tax Appeals and Insular Lumber Co., G.R. Nos. L-31U57 and L-3113:, May 2~, 1~81;

104 SCRA 718, that ther e is no time limit for the partial refund ot specific tax paid for oils used by miners and forest concessionaires.

We agree with the view of petitioner, although in tne case of imported articlesi such as fue ls;oils used in th~ instant case , the tax accrues at tne time of removal from customs custody (Sec. 134, Tax Code), and the i mporter (supplier) pays the specific tax upon removal of the same, the rignt to the refund of the LS% spec ific tax under Section 5 of Republi~ Act No. 1435, granted to miners and concessionaires, hinges on the date of payment made by the supplier (importer} of the specif ic tax. Thus, it is clearly ·stated in the law, Section 5 of Republic Act 1435, in its proviso, 'That whenever any oils mentioned above are used by miners or forest concessionaires in their operations, .!:~~lY::.f i ve J?.BE, __ £f:!!~L~.q!.. p_~_t:!l!t .§.f?e c i .L~£......~?!._1:::?. i ct t.h e .£t2.!l....:g!.9J.:l. __ l:?~~·-E..£!~Q.a e s~ !?Y.~ C<;2.ll~~~f .. _(l}Q.!:l__ C O(!l.~ i f:L~ i 2g£EJ _ . _of, l!lte r n a.l R ~~~~~E.9.!L~£!n i:.§...~) 0!}__2 f ._1?..~..££[ of actual use of oils and under conditions enu'nieratecl 1.n- subr>aragraphs one and two of section one hereof, amend ing section one hundred forty-tw~ of the internal revenu code .

xxx."

C!:!~der .. \.inin.$L...EUU§..:J 'rtd.s is so, because it i s only tram the time of use of the p urchaser-miner , petitioner herein , of the oils on which the specific tax has been paid that petitioner-purchaser has clearly shown by proof that it had bought from the importer (supplier) oil prod ucts and that only t ne n does the right to refund the 25% s pecific tax under Section 5 of Republic Act No. 1435 arises.

The claim for refund by petitioner of the amount of P779,28J.89 covered by Official Receipt No.

2~50J84 dated June L5, l97b should 254

DECISION -·

CTA CASE NO.

J52~

- lU - l ' ' be based on the date of the actual use of the oil purchases pursuant to Section 5 of Rerublic Act No. 1435 , and, hencet has not prescribed .

Respondent , however, insists that petit1oner is not entitled to refund because the benefits of partial refund expired on July 1, 1974, with the enactment of P.D. 231 , known as the Local Tax Code. Despi t e, however, the clear mandate of the law, respondent makes a denial of pet1tioner ' s cla1m because it is his view that in order to avail of the benefits ~f partial tax refund mentioned in said Act (a.A. No. 143~}, there must be a municipal or city ordinance which imposes an additional tax of not exceeding twenty- five percent (L 5%) _of the regular specific tax lev1ed under Sections l4L and 14~ of the Tax Code in the place of petitioner's operations.

This is without merit.

It must be noted that this contention of respondent was rephrased in his Amended Ans\\fer to the petit ion which stated that the prililege of a twenty five percent (~5%} refund of specific taxes paid under Section ~ of R.A. l4J5 to mine and forest concessionaire-users of oil products, mentioned in \ ,•

DECitiiON -

CTA CASE NO.

J52~

-· lY - Sections 142 and 145 (now Sections 153 and 156 ) of the Tax Code, expired on July l, 1974, with the enactme nt of P.D. No. 231 (June 28, 1973), othe rwise known as the Local Tax Code and of P.D. No. ~26 (March 30, 1Y74J ~ amending P.D. No. 2Jl, and with the issuance of Local Tax Regulations No. 1-74 (April 11, 1914) by the Ministry of Finance implementing the Local Tax Code as case which_£epe aled or .?..brogated Se ction 5 of H.A. No. 1435 , whether express or !_~p_lied.

And respondent has £y_ respondent in his rnemoran d~_I!l__£~eals R.A. 143~ .

(Italics ours.)

We are, therefore in full agreement with petit1oner when it pointed out that Section 5 of R.A. No. 1435 was never repealed. In this regard: we quote petitioner's statement on page s 14 to 17 o f its memorandum, to which we fully agree and consider as part of our own.

Section 5 ot R. A. No. 1435 1s clear and unambiguious.

In fact , this is the charac- terization of the Supreme Cou r t of said sec- tion.

Specifical l y referring to said Section 5, the Supreme Court said:

\ • - DJ;;CISION - CTA CASE NO. j 52l p ..

- 2u ·- ...

"Where the p1:ovision of t he law is clear and unambiguous, s o t ha t ther~ is no occasion for the court's see king legislative intent. , t.he ~aw must bf= r.

take n as it is, devoid of judicial addition or subtraction"

(Insular Lumber

Co. ·v. Court of Tax Appeals , L-31057 , 29

May

1981 ~ 104 SCRA 710, citing Acting Cc.vnnissioner o:f Customs v. Hanila Electric Co . ,. 7 1 SCRA 4 "I 3) • It should be noted that there is noth i ng in Section 5 that requires that before a miner o r a forest concession a ire may be e nti t l ed to a specific tax refund of twenty five perc.nt (2 5% ), there must be a municipal o r city ordinance l evying additional tax that respondent wants to read into i t. In fact, said section does not even make a ny reference t o Section 4 which authorized the munic ipal boards or councils the l evying of additional tax .

What

is clear t he ein is that the Commi ssioner of Internal Revenue shall r efund twenty-five per centum of the specific tax wheneve1~ "a ny oi ls mentioned a bove are used by mine.rs or forest concessionaires in the ir operat i ons" and the procedure for refund is complied with . P.s me ntioned 2bove, the ter m "oils ment ioned above" in the provi s o of Section 5 of R.A. No . 1435 refers to the oils mentioned under Sec tions 142 and 145 (now 153 and 15G) of the Tax Code.

This

is also the interpretatiori of respondent (ls t . three lines, p. 10, Amended Answer). It is not t i ed to the payment ot addi t 1ona l tax t :.1at local. government may impose .

The term has the same me aning as the same term in the second paragraph of Sect :Lon 142 . of the Tax Code , as amendE-~d by Section 1 of R.A. No.

143~ h a s, e xcept that the term "oils ment :i.orwd above " 1n Sect.ion 5 has broader coverage in that i t i ncludes not only those mentioned in Sec. 142, but also those \ 2 1:" ·~, u i ...

DECISION -

CTA CASE NO.

3~22 • - 21 - mention ed in Sec . 14 5 of the Tax Code , as amended cv Sec t1on 2 of R.A. No. 1 435 ; and this is tGe r eason why the refund allowed miners and for es t concessionaires has to be provided under a separate section, t hat is, Section 5.

Moreover, as in t i mated above , the oils mentioned above cannot refer to oils on which additiona l tax is imposed by local governments because Section 4 doe s not of itself impose tax but only enab l es local governments to i mpose additional t ax. In view of what wa s shown above , that is, that Section 4 has no relation to Section 5, whate ve r changes affec t ing Section 4 do not affect the e f fectivity and a pplication of Sect1on 5.

Hence, t he fact that local gove rn- ments may no longer impose a ddit iona l t ax o n oils enumerated under Sections 142 and 14 5 {now 153 and 156) ot the Tax Code, assuming this to be true, ~oes not affect, much less terminate, the ri ght of miners and f orest concessionaires provided in Section 5 o f R. A. No. 1435 to a refund equivalent t o twenty five percent (2 5% ) of the specific taxes paid.

XXX

XXX

XXX

Also , respondent says tha t even before the enactment of P.O. No . 231 and P.D. No. 426, the privilege of twenty-five percent (25 %) refund of specific taxes may not be avail.d of in the absence of any showi ng or al l egation s that claimants paid additional t ax unde r a municipal or city ordinance.

Again, this contention i s witnout merit. As shown above, the authority of local governmen .s to impose additional tax o n articles subject to specific taxes i s in no way related to the \ 250 ! , DECI!:iiON - CTA CASE NO.

352~ - 21.. - entitlement of the refund of twenty-tive percent (25%) of specific taxes. On the other hand, S~ction 5 of R.A. No. 1435, a s earlier mentioned, is very clear.

What

Section 5 only requires to be entitled to partial r efund is the submission of proof of actual use of oils and under . similar conditions enumerated on sub~aragraphs one and ~wo of sec tion one of R.A. No. 1435 which, as shown above, was complied with by petitioner .

There is nothing in Section 1 or Section 5 of the law that requires a showing or allegations that claimants paid additional tax under a city or municipal ordinance.

To read the contention of respondent into Sec t ion 5 of R.A. 1435 is to go against the well-sett led rule that a clear and unambiguous law must be ta ken as it i s , and to embark on a judicial addition (See Acting CornmiGsioner of Customs v. Manila El ectric Co., 77 SCRA 47J).

Obviously, such a manner of interpretation or appl ication cf law is not au thor :l zed."

WHEREFORE, respondent Commissioner of Internal Revenue is hereby ordered to r efund to petitioner Zamboanga Wood Products, Inc. the sum of P83~ 1 9UO.l0 as specific tax paid, without interest, as said amount refundable was not withheld arbitrarily by the Government.

No pronouncement as to costs.

\ ' .

v.

a i “VY “4 C4 *, 7 3 nas iad OVA CASE WO. 3522

AQUIN

Brees He ft

AMANTE PALLER

Presiding Judge

“ tO ng wl a os a a ear t; orig Of 2a be REYES fot c 4 3 2

Associate J

26U