CTA Case No. 2971 (Decision)

A E!'lJBLlC O[' fH� PtliLtPt"tNP ~OURT OF TAX APPUI-'lt QUEZON CtTW' ATLAS CONSOLIDATED MINING AND C.T.A. CASE NO. 2 971 DEVELOPMENT CORPORATION, Pe t itioner, - versus - COMMISSIONER OF INTERNAL REVENUE, Respondent. X ------------------- ------- X DE C I S I 0 N The single question presented is whether the peti- tioner is entitled to the partial refund of the 25 % of ~ pecific taxes collected and paid on the fuel oils con- sumption o f a mining entity as provided in Section 5 of RA No. 1435, otherwise known as An Act to Provide Means for Incre a sing the Highway Special Fund. Petitioner mining corporation organized and existing under and by virtue of the laws of the Philippines ope- rates a concession in To ledo City. It actually used and/ or consume d tax paid extra gasoline and diesel fuel f or the mining operation purchased on various dates from Petrophil Corporation, detailed as follow s : Period Spec ific Taxe s Paid 25 % October - D e ~ember 1976 El 1,288,619.75 ~ 322,154.94 7,277,865 . 88 1,819,466.47 Janu a ry - Decembe r 1977 1,877,566.70 469,391.67 January - April 1978 ~10,444,052.33 ~2,611,013.08 TOTAL .... . .... . 63

--- .. -- --------- DECISION - CTA CASE NO. 2971 - 2- j//On September 13, 1978, petitioner filed with the respondent a written claim for tax credit of the specified amount of ~2,611,013.08 representing 25% of the specific taxes paid on the said fuel oils pursuant to Section 5 of RA No. 1435, inf ra, in relation with Sections 142 and 145 of the Tax Code. Likewise, filed the instant p e tition for re ~e w on September 18, 1978 . . Republic Act No . 1435, 1ns~ far as applicabl e , provides: Section l. Section one hundred and forty -t wo of the National Internal Revenue Code, as amended, is further amended to read as follows: "Sec. 142 . Specific Tax on manufactured oils and other fuels. - x x x "Whenever any of the oils mentioned above are, during the five years from June eighteen, nine teen hundred and fifty two, used in agri- culture and aviation, fifty per centum of the specific tax paid thereon shall be refunded by the Collector of Internal Revenue upon sub- mission of the following: " (1) A sworn affidavit of the producer and two disinterested persons proving that the said oils were actually used in agriculture , or in lie u thereof. "(2) Should the producer belong to any producers' association or federation, duly registered with the Securities and Exchange Commis s ion, the affidavit of the President of the a ssociation or fed e ration, attesting to the f act that the oils were actually used in agriculture. X X X X." Se c. 3. X X X Sec. 4. X X X Sec. 5. The proceeds of the additional t ax on manufactured oils shall accrue to the road and

DECISION - CTA CASE NO. 2971 - 3- bridge funds of the political subdivision for whose benefit the tax is collected: Provided, however, That whenever any oils mentioned above ar e used by miners or forest concessionaires in their operations, twenty- five per centum of the specific tax paid thereon shall be refunded by the Collector of Internal Revenue upon sub- mission of proof of actual use of oils and under similar conditions enumerated in subparagraphs one and t wo of section one hereof, amending section one hundred forty-two of the Internal Revenue Code. X X X. Respondent i n rejecting petitioners' claim holds on to the view ear l ier invo ked i~ a c as e of the same mold that, "The privilege of a partial refund granted by Section 5 of RA No. 1435 to those using oils in their mining opera t ions , like the partia l refund of specific tax paid on oils used in agricu lture and aviation granted by Sections 142 and 145 of the old Tax Code , as amended by Republic Act No . 14 35, is limited to a period of five (5) years counted from June 14, 1956, the date t he said Republic " Act No. 1435 took effect, or only until June 14, 196l.Jr More specifically, "The petitioner is not entitled to a partial refu nd of specific taxes because the fuel oils allegedly use d by it in its minin g operations we r e used after June 14, 1961, or afte r the exemption u~der Republic Act No . 1435 had already expired. " Resolving the question squarely in the Insular Lumber Case involving as it does Section 5 of RA No. 1435, tte Supreme Court held: "Based on the aforequoted provisions , it is very ~pparent that the partial refund of specific Gr.:; 1..)

DEC ISI ON - CTA CASE NO. 2971 - 4- tax paid for oils used in agriculture and - av i a tion is limited to five years while there i s no t ime l imit for the partial refund of spec ific tax p a i d for oils used by miners and f ore st conc essionaires .' We find no basis i n a pp ly i ng t he limitation o f the operative period p rovide d f or oils used in agriculture a nd av i a t i on t o the provision on the refund t o miners and f or es t concessionaires. It should be no ted that Sec t ion 5 makes reference to subparag raphs 1 and 2 only for the purpose of presc r ib ing the proced ure for refund . This expres s refere nce cannot be expanded in scope to include the limitation o f the period of refund. If the limitatL�n ') f th e period of refund of specific taxes paid on oils used in aviation and agriculture is intended to cover similar taxes paid on oil used by miners and forest concessiona i res, there would have been n o ne e d of d e aling with oil used in mi ning and f o rest c onc essions separ ately and Section 5 s ho uld very well have been included in Section 1 of Republ i c Act No. 1435, notwithstanding the d i f feren t ra t e Of e xempti o n o II ccommiSS ioner o f Interna l Revenue v. Cou rt of Tax Appeals a nd Insul ar Lumbe r Co. No . L-31137, May 29, 1 98 1; 10 4 SCRA 718 ). Jus s o a nd aptly enough the ruling lend s settling e loque nce t o the p r ec i se issue raised in the instan t case. The apparent pa t ina of cogency impress ed nonethele s s, the res p o n dent Comm is sioner of Internal Revenue's amended ans we r urged new fillips t o wards faulting the petitioner's righ t to the claim by alleging that the partial tax refund pr i vilege c ea s ed upon the issuance of either any of the d e cr ee s , to wit: 1 . PD 3 1 4 - Increasing the rates of specific taxes on fuel oils on October 20 , 1973; or 2. PD 2 3 1 as amended - Enac t me n t of the Local Tax Cod e on June 28, 1973; or 66

DECISION - CTA CASE NO. 2971 - 5- 3. PD 711 - Abolishing the special and fiduciary funds on July l, 1975; or 4. PD 1158 and PD 1158-A- Consolidating and codifying all internal revenue laws on June 3, 1977. 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 Uwse lumber and mining com- panies seldom u ~e the national highways because they have their own roads, they have their own compounds. x x x So that if they are not entitled to the benefit of this law i t will be unfair if they will be required to pa y ." (Congressional Records, 3d Congress, 3d Regular Session, May 7 , 1967, Vol. 111, No. 67 pp. 2093-2107). Far be it from a theoretical gobbledygook, the tax privilege extended the miners/f or est concessionaries (Sec. 5, RA 1435) vis-a- vis agriculture and aviation (Sec. l ibid) could not have beer1 intended for a very limited contingency and application. Nowhere here nor there are such legal constraints of an express repeal much less effective curtailment of the operative effects of the proviso of Section 5. It certainly did not appear to matter whether the above-mentioned decrees, either, increased the rates of specific taxe s; or withdrew the local governments' power to levy and collect additional speci f ic taxes; or abolished the special and fiduciary funds; or consolidated and codified all the internal revenue laws. 67

----- - ~��=-=-=-========~~~ .DECISION - CTA CASE NO. 2971 - 6- 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 extent that the partial tax refund accorded the miners and forest conce ssionaires remained obtaining. Neither was there an attempt to undo with the terms and conditions of the tax concession upon which a claim for entitlement may be exerc Led subJect to the compliance the statutory requisites, i.e., "submission of proof of actual use of oils and under similar condit ions enumerated in subparagraphs one and two of Section one hereof." As had happened in the case at bar, the records make i t clear that insofar as the same is brought to bear upon the cir- curnstances, the evidence adduced justifiably asserts corn- pliance therefor, viz. : 1) Sworn certification of supplier Petrophil Corporation as to the quantity of extra gasoline a nd d iese 1 fuel purchased (Exhs. "A" and "A- 1") upon which tacked the receipts of payment of specific taxes (Exhs. "D", "E", "F'", "F-1 " to "E'-28", "G", "G-1" to "G -93", "H", "I" and "Bulk Invoices") and 2) Affidavits of the petitioner's Vice President duly confirmed by two disinterested persons (Exh. "C") and the Chamber of !11in'?'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, 1978. So it appears and we so hold 68

--~ DECISION - CTA CASE NO. 2971 - 7- that the petitioner has fared consistent with the mandate .... '� of the law�.{" ~ WHEREFORE, finding the peti tion to be well tak en , the same is granted, and the tax credi t of the amount sought is hereby ord ered. No pronouncement as to costs. SO ORDERED. Quezon City, Metro Manila, March 31, 1986 . ~ /') ~tJ~ , ~ ~ Associate Judge WE CONCUH.: 69