West Basilan Timber, Inc. vs. Commissioner of Internal Revenue

decision

on the matter, petitioner filed a petition for review on October 8, 1982, in order to toll the running of the two-year prescriptive period within which to judicially claim a refund under Section 230 (formerly 292> of the National Internal Revenue Code.

Petitioner prayed for an order requiring respondent to pay 20Y.

interest per annum, in addition to its claim for refund, for his alleged arbitrary refusal to refund the instant claim.

Petitioner likewise prayed for the costs of suit. To support its claim for refund, petitioner presented the affidavits of its Vice-President [Exh.

D- 1 J, Accountant [ D-3 J, and two other - D E C I S I 0 N - disinterested persons:

4 - [Exh.

D-2,

D- 5J

all attesting that £or the period November 1980 to September 1982 petitioner used in its £orest operations re£ined and manu£actured mineral oils, motor £uels and diesel £uel oil costing P5, 104, 210. 61.

Respondent admits that petitioner £iled a written claim £or re£und o£ the amount o£ P138,617.70 on January 19, 1983 and the af£idavits in support of the claim but denied the contents thereof as well as the competence of the persons who executed the af£idavits.

As special and affirmative de£enses, respondents contends that petitioner is not entitled to the re£und of 251. of specific tax paid on manufactured oils used in forest concessions previously available under Republic Act No. 1435 because Section 5 of said Act was repealed upon promulgation of Presidential Decrees 1158 and 1158-A, approved on June 5, 1977;

even assuming that Section 5 of Republic Act No.

1435 is still in effect, partial tax refund thereunder re£ers to speci£ic taxes paid by miners and forest concessionaires on fuel oil, and other similar oils having more or less the same generating power but not on gasoline, kerosene, gas

ECIS TION -

-A. Case No. 3581 “8 - 5 -' tk or -PeLEe Pere and lubricating halal that petitioner’ s right to file a “Hudierar action for refund | bf taxes paid before 8 February 1981 has already preckrvned) tanke are presumed to have been paid in accordance with law and regulations; claims for refund are construed strictly; the ahiwrnwent cannot be made to pay interest; and costs of suit t ref eanhot be imposed on the government.

The issues brought before this Court are:

1.) ° Whether or not the privilege under Section 5 of Republic Act.No, 1435 had been repealed’ by Presidential Decree No. 231 (Enastment of the Local Jax Code), as amended by Presidential Degree Nos. 1158 and 1388-A (Consolidating and Codifying All Internal Revenue Laws) particularly Sention 342 of the National Internal Revenue Code of 1977; and 72.) Whether or not petitioner is entitled to the! refund claimed, 3.) ppetner the claim prescribed.

var Section 5 of Republic Act’ No. 1435 provides: hai - "SEC. 5. The proceeds of the . additional tax on manufactured ojls:’ shall accrue. to the road and bridge funds of the political subdivision. for whose henefit the tax is collected: Provided, however, That ‘whenever (any oils mentioned’ @bove sre used by miners | er forest. conpessionaires in ‘their | operations, twenty - five per centum of the specific tak’ paid thereon shall .be refunded by the Collector of Internal Revepie pean apbetep ion of proof pt actual use of oils and under similar conditions enumerated in sub-paragraphs one and two of section one hereof, amending section one hundred forty- two of the Internal Revenue Code: Provided, further, That: po .new road shall be constructed unjesa the routes er location thereof shall have been approved by the Commissioner of Public Highways after a determination that auch road can be made part of an integral and articulated route in the Philippine Highway Systema, as required in section twenty-six of the Philippine Highway’ Ree ef 1953." .. bres ' t In the cases of Insular Lumber Company v.

Court of Tax Appeala and Cowmiasioner of Internal Revenue, G.R. No, L-31057, ‘Ney 29, 1981 (aupra) and Commiasioner of Internal Revenue v. Court of Tax Appeals and Insular Lumber Company, G.R.

No. L-31137, “Nay 29, 1981 (404 SCRA 710), the Supreme Court held that the proviso of Section 5S of' Republic. het Ne. 1435 is in effect tS abies exemption “from the imposed increased specific tax on manufactured Shl: Furthermore, Section 5 does ¥ es eo i not ‘deviate from the general subject of said law, i that tay “te =0py rare the Highway, Special Fund. The "Supreme Court, in the case of Commissioner of Internal Revenue ve. | Atlas 4 i Consolidated Mining and Development Corporation et. ae ali {G.R.. No. 93631, Nov. 412, 19901 also ded that: ‘ / r hh, x : be ‘ 4 4 - P E C I S I 0 H - C. T. A. Case No. ·3581 - 7 - "A readi n g of the legisl ~ti v e proceedings leaqing to the enactment of R.A.

1435 shows that mining and lumber concessionaires were granted p~ rti al refund of sp oific taxes because the gasoline and fuel they consume is mostl Y used within their own compounds epd roads.

R. A. ·· 1435 gave t~e~e concessionaires r elief, in the form of a tax refund, since their trucks • and vehicles selqom ply the · national highways, · the ponstruotion of which ··tis funded by t he specific tax colleQted by the nati onal . government. There is therefore no r~\ ionale in conditioning the grant of . r~fUnd on the payment pf these mining or lumber concessionaires of any additio n~! local t~x. ' Moreoyer , Section ~ provides that in any oils · used by ~iners and fo rest concessionaires in their operations 25X of the specific tax paid in the purchase th~reof · · ahel~ be refunded by t he Collector of lnterp 1 ~~venue.

Since it is the l atter who collects the speci~ic .

taxeQ due to the national government, . t~en it fol+ows ' that the refund re fer ~ to a .refund of the specific taxes paid to · the nati on~ !

government, not the specific taxes p~id to the local government. " · ' Section 5 of the s aid Act was re pealed upon '.• promulgation of. Presidential Decrees 1158 and 1158- A, approved on J4 ~e 5, l977. Sections ~ 42 and \ 145 of ~ the Old National Internal Revenue Code r ' 1:' .

became Section~ ~5 3 - ~nd 156 of the ~ a tional J • Internal Revenue . Code .. of 1977.

furthe rmore , ' . . ,, Section 5 of Re public. Act 1435 was not re~ e nacted ..

- D E C I S I 0 N -

- 8 - in the 1977 Tax Code and its repealing clause, Section 346 provides: SEC.

346.In general.

All acts, laws, decrees, executive orders, rules anp regulations, or part thereo£, which are contrary to or inconsistent with this code are hereby repealed, amended or modi£ied accordingly. " In the case o£ Rio Tuba Nickel Mining Corporation vs. Commissioner o£ Internal Revenue ;

G.R. Nos. 83583-84, March 25, 1992, the Court held that miners and lumbermen were accorded re£und priveleges under R.A. No. 1435 but with the passage o£ P.O. No. 711 the special treatment accorded to them were withheld. In e££ect the re£und privelege granted to miners and loggers under R.A. 1435 was impliedly repealed by P.O. No. 711. Mainly the reason was that, the Highway Special Fund had been abolished and trans£erred to the General Fund by P.O. No. 711 which took e££ect on July 1, 1975.

Inspite o£ the issuance o£ P.O.

No. 711, the Highway Special Fund was retained, its existence continued up to 1985 and was channeled to the General Fund only in 1986. Thus in Rio Tuba case, the High Court modi£ied its decision and ruled that mining and logging companies are entitled to the re£und - D E C I S I 0 N -

- 9 - privelege granted by R.A. No.

1435 on specific taxes paid up to 1985 on manufactured and diesel fuel oils, the same to be computed on the basis of the rates specified by Sections and 2 of R.A. No. 1435.

-t;

1 Rea~d~nt ~s claim for refund for specific taxes paid from 1980 to July 1983 then falls within the period set by the High Court. However, the Court notes that Exhibits E,

E - 1

to E - 15, F,

F - 1

to F - 680, G and

G- 1

to G-5 were not admitted per Resolution dated April 14, 1993, because the same were not forwarded nor brought before the Court at the time petitioner filed its form~ offer of exhibits on January 28, 1993. In the absence of these vital documents which are material to the determination of the exact quantities of the various refined and manufactured mineral oils, motor fuels and diesel fuel oils actually used by the petitioner in its logging operations;

this Court has no basis of verifying and computing the exact amount due if any, to the petitioner.

')

~- DECISION -

C.T.A. Case No. 358] Rule is settled that laws granting exemptions from tax are construed strictissimi juris against the taxpayer and liberally construed in favor of the taxing power ( Mitsubishi Motor Corp. vs. CIR, 181 SCRA 214).

_ WHEREFORE, in view of all the foregoing, the Court resolves to deny the petition for Jack of merit.

s0 ORDERED.

Quezon City, Metro Manila, Associate Judge i

WE CONCUR

RANON went L sth Associate Jud Pe. : ITCATIO ee: cart ies that this decision was Y wt reached after due consultation “athe the * memberm of the Court of Tax Appeals in sccordance with Section 13, Article VIII, of the Constitution.

wi QO, ERNESTO D. ACOSTA Presiding, Judge Court of Tax Appeals %