CTA Case No. 3522 (Decision)

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., C.T.A . CASE NO. 3522 Petitioner~ - versus - COMMISSIONER OF INTERNAL REVENUE, Hespondento XM<>-~-~ -u~~�� - - - �-- .... _....... -.,., - �- - - - ..--~---"'"X DEC 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, petitioner purchased from Mobil Oil Philippines ln c . (hereinafter referred to as MOBIL for brevity) ref i ned a nd manufactured mineral oils, motor fuels and diesel fuel oils wh ich petitioner h ad actually and exclusively used in connection 'with the exploitation and oper ati ons of its fore st concession. MOBIL pa id and pa ssed on to petitioner the said s pecific tax it ptid, and which wns \ 23d

DECISION - CTA CASE NO. 3522 - 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 pe ti ti on er. That in ac cordance with the provisions of Section 'S of Repu b lic 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 ptem b er 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 v e percent (25%) of the specific taxes coll ected on th e refi ne d a nd 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 c la 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 oci ati 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 ...___,__. ___,~��-- _.... ---�-# ......,_._._,......_ DECISION - - 3- CTA CASE NO. 3522 I' 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 pr es ent petition for r eview was fil ed by petitioner on Oct ober 8, 1982 , no action was tak e n by respondent Commi ss ioner of I ntern a 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 ef und was de nied by sa id res- pendent Commi ss ioner of Internal Revenu e$ Said let te r of deni a l i s quoted hereund er in full for a more concise appre cia tion of the basis f or re jection of petitioner 9 s claim f or r ef und. Jan uary 30, 1984 Carpio, Vi ll ara za, Ba rza, Cruz & Hosell LTA Building, 118 Pere a Str eet Lega s pi Vill ag e Maka ti, Metro Manila Gentlemen: With r e ference to the claim filed by you for and in ~ehalf of your c li e n t , ZAMBOANGA WOOD PROD UCTS , INC ., \ 240

()[CISION - ~- 4 - CTA CASE NO. 3522 ,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 p ublic 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, b e read in conj un c 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 ordin ance 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 pecif ic tax. Con sequen tly, a nd as the ref und 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 b e 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 ma tt er becau se that Decree abolished all s pe cial and fiduciary fun ds o Sinc e R.A. No . 1435 was p recisely passed by Congr ss to provide the means of increasing the Highway Spe cial Fund, said De cree has in effect repealed said R.A. No . 1435 h e nc e, the sam~ can no lon ger be invoked a~ th e ba s is for instituting claims f or refund of alleged overpaid spec ifi c t ax . I \ 24 1

DECISION - - 5- CTA CASE NO. 3522 ,. 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 b e 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 o ner On October 8~ 19 82 aforesaid, petitioner filed its pet ition for re iew allegir1g th e foregoing facts, wh ich materi~l a ll egations we re adnitted by responden t in h is 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 h e As sociated Invest- ments Co~ , Inc. (E xh. D, Aff idav it of filing ame n ded 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 purcha se d f rom MOBIL various quantities of refined and manu facl urerl \ 24 2

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.' 1o us 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 spec ific taxes imposed u nder Sectio ns 14 2 and 145 of the 19 39 Nat:ionr1l Internal Rev e nue Co de (Sees. 153 and 1 56 of th e 1977 Tax Co de) and passed on the sa me to petitioner which were made part. of the purch nse price (Exh .. GC). The mont hly summa r y of purchase~ (Exh~ GB) and th e tax payme~ts for dies el fuel oil and gasoline1 are as rollO\�IS: �D-I- �E-�-S- E-s Lp["Ci F IC -G---A���-S�-�0��-sL�r"IE NcrEn-r LI TERS TAX PAID L.ITLRS Tf\X PAID 19 80 51 2 ~li 00 B 35,B68 50, 000 e s,75D so,nno JUNE 52ByL}QQ 36,988 8 ,7 50 JULY 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. \

DECISION - CTA CASE NO. 3522 - 7- DI ESEL GA S 0 L I NE SPEC I(_ff_ SPECIFIC ... ., - - - - LITERS TAX PAID LITERS TAX PAID AU GU ST 614,000 B 42,980 50 , 000 e.s,750 SE PTE MBER 630,000 8 , 750 4L~, 100 'jO , OOO 8 ,7 50 OCTO BEn 550,000 5,250 38 , 500 50,000 7,00.9._ NOV EMBE R 230 -1000 16,100 30,000 DECE MBER 28 ,700 856 2.000 410 ''0.00. ~-fL_OOQ. TOTAL 19 81 500 '00 0 e 35 ,0 00 50,000 e B,750 30,000 5,250 JANUARY 480 ,0 00 33 , 600 L~8, 000 8,l100 FEBRUARY 60,000 MARCH 502,000 :$5,140 52 ,00 0 10,500 APR IL 58 , 600 9 ,170 MAY 599 ,000 f.d,9 30 42,400 JUNE 28,800 10,255 JULY 535 ,0 00 37 , 450 39,000 7,420 AUGUST 20 , 000 5,040 SEPTEMBER 46l+ ,L~O O 32,508 f+D ,OOO 6,825 OC TO BER l.Q_z 0 DO 3 , 500 NOVEMB ER 599,600 tH , 927 7, 000 DECEMBER 499..tl.Q.9_ 5,250 .321 , 200 2 2, L~B4. TOTAL es7,360 477,000 = 33,390 280,000 19,600 490 , 000 3l+' 300 441 1_000 -3~ 0 8- 70 5z6B9 2 200 _e 3?.JL..?.4 4_ 1982 ' 280 ,Cl 00 e 19,600 30,000 e 5 , 250 ~~e �: 888 34,000 JANUARY 31 220 50,000 58,,79~00 FEBRUARY 52!500 40,000 7,000 _ 40:000 _J...LQOO !'~ARCH 290,000 20 , 300 !! 33' 9 5o. APRIL 34 0~.900 . 2,3 , 800 t'1A Y - -� - - 2, 1_9_6:.tnO O..Q. ~1~20 194.000 TOT AL GRAND T0 TAL };.!_~..Q..~ e7 8 ~' 9 0 0 1 , 0 13 , 20o. I? 1 7 7 , 31p I \ 244

..- .. - �... .......- -...- .... . . . . . . . . -..-..... ~----~------------.,---=-=--~�.;,_-:...::_~------.....-w-------........----~ ..-~.-"" DECI SIO N - CTA CASE NO. 3522 - 8- On the other h a 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 tot al of spe- ci fic taxes pa id during the period was 81,567,528~40, 25% of which is now sought by p etitioner to be refund ed 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 die sel, 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 e nti tled to th e refund o f the 25% of th e sp e cific taxes coll e cted and p a id o n fu e l oil con sump tion as a forest concessionaire as pro vi ded in th e a f o r�e s a i d Sec t ion 5 o f Re p ub 1 i c Ac � 14 35 in th e amo un t of es32,9DO ~ IO. \ 245 ,, Q

DECISION - - 9- CTA CASE NO. 3522 .~� ' 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 a ctua lly u se d in the exploitation a nd operations of its for e st concessiono It asserted th a t under the sa id 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 ben ef it the tax is collected: Pro- vided,: .h owever. That whenever any oi l s ~ioned abov ~ are used by miners-�ar-fo re st co nc 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. l U t h e r e C?.Jl....�..h a e r.e f ~-!.El.~..9_..E.i....Jh!:_Co].~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 u r ther, That no new roa d s h al l bec-oriS""f"ru c ted- �unless the routes or l ocation thereof shal l have been approved by th e Comm is sioner of Public Highwa ys afte r a determination that such ro ad can be made part of an integral and articulated rou te in th e Phili ppi n e Highway Syst em , as required in section twenty-six of the Phi lippin es 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 a n d \

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 e ly, 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 . 1 53. 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 pow er , 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 o n, 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 solve nt s, 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 !(

DECISION CTA CASE NO. 3522 �~ 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~ c e 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 vo 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 mad e 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 the 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 - .. 12 ... CTA C~SE NOu 3522 .. (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

DECISION - CTA CASE NO. 3522 - 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 Nove mber 28 , 1986 and March 31, 19 86, 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 rov isions, 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

DECISION - CTA CASE NO. 3522 �- 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 a n swer 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 be e 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 re ma 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 sub ject 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 (Ex hs. "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 pe 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 ma ndate 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 -� - 17 ~ CTA CASE NO. 35L2 .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::.fi ve J?.BE,__�f:!!~L~.q!.. p_~_t:!l!t .�.f?ec i .L~�......~?!._1:::?. i ct t.he.�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 - - 2u �- CTA CASE NO. j 52l ... "Where the p1:ovision of t he law is clear a nd 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 ~ 1 04 SCRA 710, citing Acting Cc.v nnis sioner 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 ce ntu m 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 compl ied with . P.s me ntioned 2bove, the ter m "oils me nt ioned above" in the provi s o of Section 5 of R.A. No . 1435 refers to the oil s 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 Sect ion 1 of R.A. No. 143~ h a s, e xcept that th e 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 \ p .. 2 1:" �~, ui ...

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 refu nd allowed miners and for es t concessionaires has to !, be pro vided under a separate section, t hat is, Section 5. Mo reover, as in t i mated above , the oils mentioned above cannot refer to oils on which addition a 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 mp os e additional t ax. In view of what wa s shown above , th at 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 %) refu nd 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. Ag ai n, 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 v. 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 wh ich, 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 Prod ucts, 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. \ .'

DECISION - CTA CASE NO . 3522 - 23 - SO ORDERED. Quezon City , Metro IYlanila., M~~/15, l9C$7. /, . ~v~-a-:.t,-r;f/;'Jud9e WE CONCUR: NTJ~7. ~UIN C0N ~~ v ~~~~~ ") 7ssociat.e PArMeAsNi'dl'Ein~~~~~e ~~/ As so-c 1&. te Judge 260