CTA Case No. 3524 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ARAS-ASAN TIMBER CO., INC., Petitioner. - versus - C.T.A. CASE NO. 3524 COMMISSIONEROFINTERNAL REVENUE, Respondent. I -----------------I �'!DECISION Petitioner seeks to recover 25% of the specific taxes paid on various oils and fuels actually used in its forest operations pursu ant to the provision of Section 5 of Republic Act No. 1435 in relation to Sections 153 and 156 ormerly Sections 142 and 145, respectively) of the National Internal Revenue Code of 1977, as amended. Petitioner is a domestic corporation duly licensed to operate a forest concession. It has the authority to cut, collect, remove and utilize timber of all groups, except prohibited species, in the public forest of . Marihatag, Cagwait, Bayabas, Tago and

DF.CISION C.T.A. CASh NO. :ti24 Tandag, Surigao del Sur by virtue of its Timber License Agreement No . 48-A (Exh. B]. In order to ably operate a forest concession, petitioner uses refined and manufactured mineral oils, motor fuels and diesel fuel oils in its forests operations. From July 1, 1980 to October 3 1, 1981, petitioner paid the corresponding specific taxes on its purchases of diesel fuel oils, regular gasoline fuel, industrial fuels and oils and lubricants from Mobil Oil Philippines, Inc. [Exh. QQ, p. 9 1, CTA record]. By virtue of the provision of Section 5 of Republic Act No. 1435 [An Act To Provide Means For Increasing The High\ony Special Fund ] and the decision of the Supreme Court in the case of I n sular l umber Co. ~ Court of Tax .Appeals_. fi.R. No. l -3105l May 2 9, 196 1 {104 .n::K.A 710). petitioner invoked entitlement to the 25~ partial refund on the specific taxes paid on manufactured mineral oils and fuels actually used in its forest operations. A claim for refund [Exh . A], dated September 18, 1982, was filed on September 23, 1982 'VVith the respondent's office in the total amount of P 152,794.38, computed as follows: (Exhs. A- 1-a, A-2 -a, A-3-a, A-4-a and A-5-al ARAS-ASAN TIMBER CO ., INC. July 1980 -October 1981 VOLUME PRODUCT SPECifiC 250J6 REFUND (Liters) COST TAX DIESEL 841,700 P2,279.345.00 P147,297.50 P 36,824.38 OIL & LUBRICANTS 47 L850 1.258.222.00 377.480.00 94.370.00 GASOLINE REG . 96,000 453.41 7.00 86,400.00 21,600.00 P3,990,984.00 P611,177.50 P152.794.38

DECISION CT.A~ CAS. 10. 3524 - Page3 - To support its claim for refund, petitioner presented .-the affidavits of its President [Exh. A- 1), Cost Accountant (Exh. A-2), Chief Accountant [Exh. A-3), and two other disinterest persons: two duly licensed forest concessionaires [Exhs. A- 4 and A-5], all attesting that for the period July 1, 1980 to October 30, 1981 petitioner used in its forest operations refined and manufactured mineral oils, motor fuels and diesel fuel oil costing P3,990.984.00. Without \Vaiting for respondent's 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 20% interest per annum, in addition to its claim for refund, for his alleged arbitrary refusal to t�efund the instant claim. Petitioner likewise prayed for the costs of suit. Section 5 of Republic Act No. 1435 provides: "SEC. ~- The proceeds of the additional tax on manufactured oils shaH accrue to the road and bridge funds of the poJitical subdivision for whose benefit the tax is colJected: Provided. however. That w henever any oils mentioned above are used by miners or forest concessionaires in their operations, twenty -five per centum of the specific tax paid thereon shall he refunded by the ColJector of Internal Revenue upon submission of proof of actual u~e of oils and under similar conditions en umerated in sub-paragraphs one and two of section one hereof. amending section one hundred forty -two of the Internal Revenue Code: Provided, further . That no new road shall be constructed unless the routes or location thereof shall have

DEOSION - C.TA. CASE NO. :fi24 been approved by the Commissioner of Public High\A.rays after a determination that such road can be made part of an integral and articulated route in the Philippine Highvvay System, as required in section twenty-six of the Philippine Highway Act of 1953." In the cases of Insular Lumber Company v. Court of Tax AppevJls and Commissioner of Internal.Revenu~ G. .ll No. L -31057., May 2~ l9c,fl {supra.) and Commissioner of Intern31 .Revenue v. Court of Tax AppevJls and Insular Lumber Comp3n~ li.K.. No. L -311.17., May 2~ 1941 {104 Jr.RA 7 10l the Supreme Court held that the proviso of Section 5 of Republic Act No. 1435 is in effect a partial exemption from the imposed increased specific tax on manufactured oils. Furthermore, Section 5 does not deviate from the general subject of said law, that is, to increase the Highway Special Fund. Petitioner relied on the above -mentioned decision of the Supreme Court as well as the particular provision of Section 5 of Republic Act No. 1435 as bases for claiming a refund . After an answer has been filed, respondent rendered a decision. dated August 2 C 1984, denying petitioner's claim for refund [Exh. QQ, p. 130, CTA record]. Petitioner presented and formally offered its evidence without any objections on the part respondent. On August 16, 1985, respondent filed an amended answer with leave of Court. He contended that the law (R.A. 1435) relied upon by petitioner had been repealed by Presidential Decree No. 231, (otherv.Jise knovm as the Local Tax Code) and Presidential ~

IJECISION - C.TA. CASE NO. N4 - Page5- Decree No. 426 (amending P.D. 231), and its implementing regulation specifically Local Tax Regulations No. 1-74. Respondent added that even before the repeal of Republic Act No. 1435 petitioner cannot avail the privilege under Section 5 thereof in the absence of any allegation regarding payment of the additional tax under a municipal or city ordinance as indica~d in Section 4 of the same Act. He pointed that Section 4 must be read in relation to Section 5. Section 4 of Republic Act No. 1435 insofar as pertinent provides: �sEC. 4. Municipal boards or councils may, notwithstanding the provisions of sections one hundred and forty-two and one hundred and forty-five of the National In~rnal Revenue Code, as llerein above amended, levy an additional tax of not exceeding twenty -five per cent of the rates fixed in said sections, on manufactured oils sold or distribute within the limits of the city or municipalities: Provided, That municipal taxes heretofore levied by cities through city ordinances on gasoline, airplane fuel, lubricating oil and other fuels, are hereby ratified and declared valid. The method of collecting said additional tax shall be prescribed by the municipal board or council concerned ... R~spondent asserts that Sections 4 and 5 of Republic Act No. 1435 have been repealed by Section 343 of the National Internal Revenue Code of 1977 (Presidential Decree Nos. 1158 and 1155-A), which provides in part: �sEC. 343. Granting provinces, cities and municipalities shares in the specific tax on certain petroleum products. - In addition to the internal 1 1 q ;,

.. IJF..CISION - C.T.A. CASE t-.10. :fi24 - Page6 - revenue allotment under Section three hundred forty-fou~-, provinces, citie~ and municipalities shall share in the specific taxes on the following petroleum products in such amounts as may be equivalent to the collections tl1erefrom at the rates indicated hereunder : XXX XXX XXX. The additional allotment is in lieu of local taxes imposed on petroleum products and for this purpose, Section twenty-four of Presidential Decree numbered 23 1, otherwise known as the Local Tax Code, has been repealed by Presidential Decree numbered 436 on March 30, 1974. XXX XXX xxx.� Respondent further argued that petitioner's right to claim a partial refund of specific taxes paid prior to October 8, 1980 had already prescribed. Finally, he cont~nded that the government cannot be ma.de to pay inoorest in the absence of any statutory provision directing or authorizing such payment. /Collector of Internal .Revenue v. St Pauls Hospital of Iloilo.,. G..R. No. L-1212 1. May 25. 1959 {105 Phil. 1319).,.- Tbe Marine Trading Co... Inc. v. The Government of t.he Philippine Island.., G.R.. No. 1342~ November~ 1914 {39 Phil. 29).,.- Gregorio Sarasola v. W'enceslao Trinidatt Collector of Inte.rnal Revenue of the Philippine Islantt G..R. No. L - 14595. October 1 ~ 1919 {40 Phil. 252)/_ Neither can the cost of suits be imposed on the government. /Section ~ Rule 14~.,__ Rules of Court:.� Collector of Internal .Revenue v.

DF.CJS[{)N - C.TA. CASE NO. :fi24 - Pa~7 - Convent.io.n of PltiL Baptist Churcbes a.nd the Court of Tax Appeal~ !T..N_No_L-11807.. May 1~ 1961 (2 .SUA J())j There being no dispute on the material facts, respondent did not present any evidence. Instead, he submitted the case for decision on a purely legal question. 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 (Enaetmetl of the 1 Local Tax Code), as amended by Presidential Deeree No. 426 and by Presidential Decree Nos . 1158 and 1158-A (Consolidating and Codifying all Internal Revenue La~'v"S) particularly Section 342 of the National Internal Revenue Code of 1977; and 2. Granting arguendo that the privilege under Section 5 1 of Republic Act No. 1435 has not been repealed, 'Y'Y'hether or not petitioner is entitled to the refund claimed absent any allegation of payment of the additional tax imposed by the municipal boards or councils as prescribed by Section 4 of Republic Act No. 1435. Anent the first issue, respondent stressed tllat tlle subsequent enactment of various Presidential Decrees and ExecutiYe Orders, increasing the rate of specific taxes under the National Internal Revenue Code, impliedly revoked the partial refund privilege under Section 5 of Republic Act No. 1435. He stressed that the '"?et�y urpose why the governm-ent increased - the rates of specific taxes is to provide additional revenues to accelerate economic development in the country. The grant of

IJF.CISION - C.T.A. CASE NO. :ti24 - PageS- partial refund would therefore run counter to the very purpose for which the specific tax rates were increased. We disagree v-vith respondent. In the case of Commissioner of Internal Revenue v.. Atlas L.onsolidated Mining and ./Jevelopment Corporatio~ et al_. G..R. No. 9..16.JL November 1~ 1990., the Supreme Court, in a Resolution by the Third Division, had the occasion to rule tl~at. )lle purpose for tl1e !ncrease in the rate of tax cannot in anyway negate tl1e policy behind the grant of partial refund . The Court. sees no inconsistency between the increase in specific tax rates and the retention of the refund privilege. In fact, with the increased specific tax rates, the grant of partial refund to mining and lumber concessionaires is made more imperative considering that they seldom use t11e high�v'Tays, t11e construction of which are financed by spec!fic taxes." With regard to the second issue, respondent maintains that petitioner is entitled to a refund only if the additional specific taxes imposed by the municipalities and cities concerned have been paid. He pointed that where there is no such ordinance imposing an additional specific tax to miners and forest concessionaires, no refund could be availed of as perceived from a reading of the provisions of Sections 4 and 5 of Republic Act 1435. ,,., .I 1\ We find fitting tl1e following comments of the Supreme Court in the case of Commissioner of Inter.11al Keve.11ue v. Atlas Consolidated Mi.ni.11g a.11d 1Jevelopme.11t Corp.., et al.., (supra.) � '} ,- 1 �i

DF.CJSION- C.T.A. CASli .. tb. :ti24 - Page9- "A reading of the legislative proceedings leading to the enactment of RA 1435 shov.,rs that mining and lumber concessionaires were granted partial refund of specific taxes because the gasoline and fuel they consume is mostly used V\Tithin their own compounds and roads. RA 1435 gave t11ese concessionaires relieC in the form of a tax refund, since their trucks and vehicles seldom ply the national highVvrays, t11e construction of which is funded by the specific tax collected by the national government. There is therefore no rationale in conditioning the grant of refund on the payment of these mining or lumber concessionaires of any additional local tax. Moreover, Section 5 states 'that the 25% specific tax shall be refunded by the Collector of Internal Revenue.� Since it is the latter vvho collects the specific taxes due to the national government, t11en it follovvs that the refund refers to a refund of the specific taxes paid to the national government, not the specific taxes paid to the local government." And in the more recent case of Co.m.missio.11er of Ioteroal.ReYe.l1lle v.. .Rio TUba Nickel Mi.l1i.l11J CorporaUo.11 and Court ()f Taz Appeal~ G.R. 8()5.. 8)56.1-8-.f:, Sepw.mber .JO.. 1991 {2()2 .srRA 1.J7),. the Supreme Court Third Division held: "(t)o our m.ind, the proviso in Section 5 standing alone is enough basis for the grant of refund. x x x. In fact, the entire proviso of Section 5does not even make any reference to Section 4 Tv\Thich empo�.,.,rers municipalities and cities to impose the additional tax on oils sold or distributed "Vv'ithin their territorial jurisdiction. What is clear therein is that the Revenue Commissioner shall refund 25% of the specific tax whenever �any

DF.CISION - C.T.A. CASE NO. :fi24 "" - Page to - oils mentioned above are used \)y miners or forest concessionaires in their operations and the procedure for refund is complied ~Nith . " Finding for the petitioner, the only thing left to be determined by this Court is the amount of specific taxes to be refunded \)y respondent Commissioner of Internal Revenue in favor of petitioner. Petitioner claims that it is entitled to the 25% partial refund of specific taxes paid from its purchases of refined and manufactured fuel oils, diesel fuel oils and lubricating oils from July 1, 1980 to October 31, 1981 in the total amount of P 152,794.38. Hovlever, in its Memorandum, petitioner included in its claim for refund purchases of fuels from November 1981 to Janu.ary 1982 . A Table shov~ng purchases of Diesel, Regular Gasoline and Industrial Fuel from July 1980 to January 1982 'V-Ias presented by petitioner. It ms alleged that it paid a total of P545,063.38 specific taxes on said purchases. The amount now being cla.imed as 25~ refund on specific taxes paid is P 136,265.84 instead of tl1e original P 152,794.38. It appears also that petitioner did not include in the Table its purchases of lubricating oils as the sales invoices, covering these purchases, indicated drums instead of liters. However, petitioner offered in evidence its working paper marked as Exhibits 00, 00-1 , 00-2, 00-3 and 00-4 shovving its Cash Receipts or Disbursement �vouchers with tlH~ oils and lubricants already converted into lit~rs. A drum of oil is equivalent to 208.175 liters based on the ~".rorking paper presented by petitioner. [See ~ 1 2 U0

DF.CJSION- C.T.A. CASE NO. :fi24 -Pagett - Exhs. 00, 00-1 to 00-4, inclusive.) Respondent did not oppose petitioner 's offer of evidence. Respondent argued that specific taxes paid prior to October 8, 1980 had already pres(~ribed the petition having been filed only on October 8, 1982 . The Tax Code provides for the judicial remedy of filing a daim for refund Vvithin a period of two (2) years from the date of payment of the tax pursuant to the pfrovision of Section 230 (formerly Section 292 ). Section 135 of the Tax Code insofar as pertinent provides "that specific taxes on locally _manufactured petroleum products levied under Sections 153, 155 _and 156 of this title. except lubricating oil and grease. shall be paid within fifteen ( 15) days from the date of removal thereof from the place of production." It is therefore evident that t11e manufacturer of petroleum produds has up to 15 days from tl1e date of its removal \Nitllin which to pay tl1e specific taxes on locally manufactured petroleum product.s. As an exception, manufacturers of lubricating oils and grease have to pay the specific tax collected from the purchaser on the date of it.s removal from the place of production . Petitioner purchased both manufactured petroleum products and lubricating oils and grease. Thus, v.nth respect to its purchases of lubricating oils, the specific taxes paid tllereon are deemed paid at tlle date of its removal. The claim for refund of tlle 25% specific taxes paid on oils and lubricants purchased and ./Z delivered prior to Qctl)ber 8. 1980 had indeed prescribed\ Afence,

DF..CISION- ,, C.T.A. CASE A.;0. :fi24 - Page12- the corresponding 25% partial refund of specific tax paid on 2,g14.45 liters of oils [Exh . }-1] purchased from Mobil Oil Philippines, Inc., in S~ptember 4, 1gao ~ Invoice No. 27221 F, had prescribed. [See also Exll. 00. p. 83, CTA record .] ' All claims not included in tl1e claim for refund filed in the adminish-ativ�e level (BIR) cannot be the subject of the present appeal. Thus, purchases of petroleum products and lubricants f � made after October 3 1, 1ga 1, not being included in the claim for refund filed 'With the respondent's office, cannot be considered by tJ1is Court for the same was not included to form part of its claim for refund v'lith the BIR nor of this petition for review. The petition calls for the refund of 25% of the specific taxes paid on petitioner's purchases of mahufactured oils and fuels from July 1, 19()0 to October 31, 193 1 and not purchases of fuels from July 1, 1gao tl) January 3 1, 1932, as prayed for in the Memorandum. Follovving the provision of Section 135 of the Tax Code, the specific taxes paid on the rest. of tJ1e petroleum products _ purchased by petitioner falls due on the 15th day follo'Wing the date of its removal. Therefore, all shipments of petroleum products, except oils and lubricants, paid by petitioner 15 days prior to October 8, 1980 or on September 2 3. 1Q80 are deemed paid on October 8, 1980 which is well 'Within tJ1e two-year prescriptive period as prescribed under Section 230 of the National Internal Revenue Code. The specific taxes collected from petitioner on its purchases of petroleum products other than oils on September 23, 1gao shall be paid v..Tithin 15 days from the daw of its removal or on

DF..CISION - C.T.A. CASE 1~0. :ti24 - Page13 - o, OdobE>r 1980. It follov.;rs that on October 8, 1980, all purchases of locall}T manufactured petroleum products, except oils, on September 23, 1980 are deemed paid. Thus, all purchases of fuels prior to September 23, 1980 have prescribed. It should be noted that in the case of Commissioner of Internal Revenue y_ Rio Tuba Nickel Mining Corporation and Court of Tax Appeals., supra_"" the Supreme Court's Third Division granted Rio Tuba's Motion for Reconsideration of its decision dated September 30, 199 1. The Supreme Court in its Resolution, dated lv1arch 25, 1992, arrived at the folloVving conclusion, to wit: "Since the private respondent's claim for refund covers specific ta.xes paid from 1980 to July 1983 then we find that the private respondent is entitled to a refund. It should be made clear, ho\~.rever, that Rio Tuba is not entitled to the whole amount it claims as refund . The specific taxes on oils which Rio Tuba paid for t11e aforesaid period were no longer based on the rates specified by Sections 1 and 2 of R.A. No. 1435 but on the increased rates mandated under Sections 153 and 156 of the National Internal Revenue Code of 1977. We note, however, tl1at the latter lavv does not specifically provide for a refund to these mining and lumber companies of specific taxes paid on manufactured and �diesel fuel oils . In Insular Luml)er Co. v. Court of Tax Appeals, ( 104 SCRA 7 10 [ 19() 1]), the Court held that the authorized partial refund under section 5 of R.A. No. 1435 partakes of the nature of a tax exemption and tl1erefore cannot be allowed unless granted in the most explicit and categorical 1208

DF.CI5ION- C.TA. CASE NO. :fi24 - Page14 - language. Since the grant of refund privilege must be strictly construed against t11e tm~-payer, t11e basis for tile refund shall be amounts deemed paid under Sections 1 and 2 of R.A. No . 1435. ACCORDINGLY, the decision in G.R. Nos. 53563-34 is hereby MODIFIED. The private respondent's CLAIM for REFUND is GRANTED, computed on the basis of the amounts deemed paid under Sections 1 and 2 of R.A. No. 1435, mtllout interest. SO ORDERED." The aforesaid ruling was furtlH~r discussed by tl1e High Court in response to Rio Tuba's Motion for Clarification which is actually a second Motion for Reconsideration. In its Resolution dated June 15, 1992, t11e touo~.o\1ing comments were elucidated: ''Rio Tuba's ~ ntention tha.t the refund should be as~d on the rates effective at tile time tlle specific tax was paid is without merit. Section 1of RA 1435 amended Section 142 of tlle National Internal Revenue Code providing for increased rat~s on specific taxes. Section 142 of tile NIRC incorporated the refund privilege on specific taxes paid on manufa t 1 ed oils which are used in ~griculture and aviation. Section 5 of RA 1435 provided for a refund privilege on specific taxes on manufactured oils paid by miners or forest concessionaires. There is a difference in the refund privileges of those engaged in agriculture and aviation on one hand, and miners or forest concessionaires on the other . Since the refund privilege of the former is incorporated in Section 142, then upon any amendment of Section 142 increasing the tax rates, the basis for the refund ~Nill accordingly be adjuswd. _,

DF.CISION - C.TA. CASE hO. :ti24 - Page 15 - Significantly, the refund privilege granted to miners or forest concessionaires is not incorporated in Section 142 but is found in Section 5 of RA 1435. There is thus an intent on the part of the legislature to use the specific tax rates provided in Section 1 as the sole basis for refund, notv�rithstanding future rate increases. All the sections of RA 1435 must be read as a whole . In U1e absence of any express provision of law, the refund privilege granted to miners and forest concessionaires in Section 5 must be construed as based on the specific tax rates provided in Section 1. Regarding the Commissioner of Internal Revenue's (CIR's) contention in his motion for recons�deration tllat RA 1435 had become an a la~hronism way back in 1973 w11en the legislature provided for increased specific tax rates on m nufactured oils, said position that a partial refund \TOUld be inconsistent With the purpose of the subsequent laws increasing specific tax rates is Without merit. The refund privilege is not inconsistent t:.l?itl1 the increase in specific tax rates since the refund is based only on the original rates provided in Section 1 of RA 1435. These subsequent laws did not therefore, '}.'Pressly or impliedly, repeal the refund privilege . XXX XXX XXX." The Court, after examining tl1e Invoices offered by petitioner as evidence, arrived at the folloWing computation on the refundable 25% specific taxes paid on Diesel, Regular Gasoline, Industrial Fuels from September 23, 1980 to October .3C 1981, and Oils and Lubricants from October 8, 1980 to October 31, 1981, as follo-ws :

DF.CISION - C.T.A. CASE NO. :fi24 - Page16 - Date Purchases of fuels and Oi.l in Liters Exhs . Invoice No. Shippe,j Diesel Reg. Gas Ind. fuel Lubricants M-4 46170 E 09-25-80 10,000 09-23-80 8,000 l�!l-5 46159 E 09-24-80 4,000 09-27-80 4,000 M-6 46164 E 10-06-80 10,000 10-13-80 4,000 M-7 46176 E 10-20-80 10,000 10-20-80 10,000 N-1 46195 E 10-23-80 8,000 10-24-60 10,000 N-2 00011 f 10-27-80 4,000 2,000 11-03-80 2,000 N-3 00022 f 11 -06-80 10,000 11-07-80 10,000 N-1 00025 f 11 - 17-80 10,000 11 - 19-80 10,000 N-5 00029 f 11 - 17-80 6,000 11-18-80 10. 000 N-6 001}31 f 11 - 11-80 4,000 12-04-80 N-7 00038 F 12-03-80 07-1"'-80 4.000 N-8 31693 F 12 - 2 ) - 8 0 2,081.75 11-26-80 10,000 N-9 00059 f 11-26-80 10,000 4,996 .20 0-1 ooo6t r 11-27-80 10,000 416.35 0-2 ooo79 r 11 -28-80 6,000 0-"3 00087 F 11-28-80 1,040.88 12-01-80 4,000 P-1 00080 f 12-04-80 10,000 4,000 624 .53 12-04-80 10,000 832 .70 P-2 00084 f 12-0)-80 10,000 4,788 .03 12- 10-80 . 6,000 P-3 00067 f 12-15-80 10,000 12-15-80 P-4 48140 f 12-15-80 2L600 12-17-80 10,000 P-) 48141 F 12-19-80 10,000 12-19-80 10,000 P-6 63605 F 12-22-80 2,000 2,000 12-26-80 Q-l 48891 f 12-16-80 01 -05-81 10,800 Q-2 00099 f 01-05-81 10,800 01 -06-80 10,800 Q-3 00103 f 01 -06-81 10,800 07-14-81 6,000 Q-4 00104 f 01 -19-81 Q-5 00105 f 4,000 R-1 00106 f R-2 00108 f R-3 00117 f R-4 00119 f R-5 00123 f R-6 00130 f 4,000 -S-1 00137 F S-~? oot38 r S-3 00139 F S-4 001Hf S-5 oo145 r S-6 00 146 f 4,000 21,600 T-1 ootso r 4,000 T-2 49170 r 2L600 T-3 49592 F T-4 49431 r T-5 49432 f U-1 49433 r U-2 494"34 f U-3 63607 r V- 1 50960 f

DECISION C:.T.A CASF. 1" 0 .3524 - Paget7 - V-2 5101 6 f 01 -20-S1 21 .600 4.788 03 V- 3 0005 4 f 11 -05-80 10,000 1,219 .0) W- 1 51135 f 01-29-81 21.600 3.330.80 W-2 62)64 f 02- 11 -81 1.249.05 W- 3 632)8 f 02- 12-81 21 .600 W- 4 ) 173 4f 02 -0)-81 21.600 4.788 03 X- 1 62986 f 41 6.35 X-2 71944 f 02-21 -81 21 .600 208.18 x-- 3 6.~ 258 F 21 ,600 Y- J 49521 f 03-05-81 1.249 .05 Z- 1 19)69 f 02 - 26 - 81 21 .600 Z-2 01 -07-81 21 .600 4,163 .) 0 51435 f 01 -07-81 Z- 3 31016 F 01 -29-81 4,000 2.289 .93 Z- 4 00158 f 01 -20-81 1,665 .40 AA - 1 00160 f OJ -06-81 10.000 4.000 1.040 .88 01 - 19-81 6.000 4.000 3.330 .80 AA-2 00161 f 01 -20-81 10,000 AA -3 00164 f 01 -23-81 10,000 21,600 ~ AA -4 00166 f 01 -27-81 10,000 AA -5 00167 f 01 -29-81 10 .000 21 ,600 RD- 1 00169 f 02-02-81 4,000 BD-2 0019(1 f 02- 12-81 6.000 6 ,01) 0 02- 13-81 10,000 DR- 3 00191 f 02- 16-81 10,000 1 .000 RR -4 00193 f 07- l)-81 8,000 CC- I 63611 f 02- 17-81 1.000 4,000 OD- 1 00 197 f 02 - 1 7- ~ 1 10 .000 2,000 DD-2 02- 18-tH 10.000 DD- 3 001 98 f 02-18-81 10,000 4,000 00200 f 02- 12-51 DD- 4 02- 12-81 2,000 DD-5 45801 f 07- 16- 1 4.000 DD-6 62564 f 07-�23-81 2.000 DD-- 7 626 18 f 2-21-81 DD-8 9. 872 f 02-26-8 1 f:.�- 1 6362) f 0.~ -09-8 1 4.000 EE �2 E2986 f 03- 13-81 10.000 63258 f 03- 17-81 6.000 ��-.' 45813 F 03- 18-81 10,000 45841 f 0 .~ - 1 9- 8 1 10 .000 Ef-4 �1584) f 03-23-81 10.000 EE-5 45848 f 1n-2:>-81 10.000 EE�6 45819 f 04-0C)-81 6,000 ff-1 45850 f 04- J0-8 1 4,000 ff-2 �158)2 f 04 - 28 -81 GG� l 05-05-81 4.000 GG-2 4586 3 f 05- 12-81 10,000 4586) f 0) - 13-81 10 .000 GG- .~ 77163 F 05- 19-81 to.ono lUI- 1 45891 F HH-2 4)897 f 05-20-81 HH-3 45898 F 05 -21 -81 IJ- 1 635 11 r �~ JJ - 2 05-25-81 8 000 635 17F 05 -27-81 8,00(1 II - ~ 0')-27-81 2.000 635 1S f 04-23-81 JJ - 4 63524 f II - ) 63531 f 03-05-81 63532 f .TT-l 4588 1 f 71<}41 f JJ-2 I:I:- J rK-2 1/ I [I

DECISION C.:T_A CASE ND_ 3524 - Page18 - l:K-3 45885 f 04-30-81 6,000 2.000 41635 KY.-4 45886 f 04-30 -81 2.000 KK-5 63')38 f 06-01 -8 1 2.000 4,000 3.330 80 KK -6 63543 f 06 -02 -81 8,000 LL-1 85746 f 06- 19-81 72 .000 5.204 .38 MM-1 63562 f 06 -17-8 1 6,000 416 .35 MM-tl NN-1) 93649f 07- 14-81 2.000 3.122 .63 NN-2 93872 f 07- 16-81 6,000 3.538 .98 NN- 3 06800 G 09-21 -81 8.000 1.457 .23 NN-4 06801 G 09-21 -81 NN-5 07930 G 10-22-81 500 62 .036 .21 NN-7 63)84 f 07-06-8 1 NN-8 63477 f 07-03 -81 NN-9 6,~61 7 F 07-20-81 NN-10 6319) F 07-09-81 TOTAL (, 13.700 280,800 The Resolution or the Supreme Court dated March 25. 1992 in the Rio Tuba case (supra.) stated that the claim for refund of specific taxes should be computed on the basis of the amou nts deemed paid under Sections 1 and 2 of R.A. No. 1435. without interest . Sections 1 and 2 of R.A. 1435 insofar as pertinent provides: "SECTION 1. Section one hundered and forty - two of the National Internal Revenue Code. as at tended, is further amended .to read as follows: "SEC. 142. ..~peciJJc Ta.r on numufac- tured oils ond otherfuels. - On refined and manufactured mineral oils and motor fuels, there shalJ be co1Jected the following taxes: (a) X X X XXX X X X. (t ) Lubricating oil s. per titer of volume capacity, seven centavos;

DECISION C..T.A .CAS�-.NO. 3S24 - I~ge19 - (cl Naptha, ga~oline . and alJ other similar products of distillation. per Jiter of volume capacity, eight centavos; and (d) XXX XXX X X X." "SEC. 2. Section one hundred and forty -five of the National Internal Revenue Code. as amended, is further amended to read as follows: SEC. 145. Specific Tar on fJiese/ fuel oil - On fuel oil. commercially known as diesel fuel oil. and on all similar fuel oils. having more or less the same generating power, there shall be collected, per metric ton, one peso." With respect to the amount refundable on purchases of diesel and industrial fuel. both parties agreed and arrived at a formula. in conve rting liters of diesel and industrial fuel to metric tons. The base for computing the amount refundable for specific tax es paid on dieseJ and industrial fuel should be that as prescribed in Section 2 of Republic Act No. 1435. The formula to convert Jiters to metric tons of diesel and industrial fuel as agreed upon by th e parties is: No. of liters x Specific Gravity .. Metric Ton 1,000 It was further agreed that the specific gravity of diesel is tU~429 . WhiJe the specific gravity of industrial fuel is 0.9493. Thus, the total number of liters of diesel subject to refund is 1113.700 equivalent to 5J7.2R773 metric tons, computed as fnJiows :

DECISION - C.TA. CASE NO. ~4 - Page20- 613.700 lts. of diesel x 0.0429 = 517.2&773 Metric tons 1,000 of Diesel and the tot-J.l number of liters of industrial fuel subject to fefund is 280,&00 equivalent to 266.56344 metric tons, computed as 280.800 lts. of industrial fuel x 0.9493 = 266.56344 1,000 Metric Tons of Ind . Fuel After having converted the liters of diesel and industrial fuel into metric tons. the Court can nov.,r compute the amount to V~1licll petitioner is entitled to be refunded on the specific taxes paid from the use of petroleum products purchased for the period covering September 23, 1980 to Octot>er ?> 1, 19& 1. Petitioner is entitled to the amount of P2,721.63 computed by the Court, as fOllOTvVS : Refunda.ble Amount nf 251~ Specific Ta'<es Paid on Regular Gasoline, Oils & Lubricants, Diesel and Industrial F-uel Oil Purchased from Sept . 23, 1980 to Oct. 3L 1981 Pet' Court 's Computation based on Secs.l and 2 ofRA1435 Specific Tax Rate Amount Paid Regular Gasoline 72,000 lts . x PO .08/1t . [Sec . 142 (c) I p 5,760.00 Oils and Lubricants 62,0361ts. x PO.O? / lt [Sec. 142(b) 1 4.342.52 Diesel 517 mt . x Pl.OO/mt . [Sec. 145] 517 .00 Industrial Fuel 267 mt. x Pl.OO/mt. [Sec. 145] 267.00 .I Tot at P10,886 .52 Percentage refunda.ble 'l.mder Sec . 5 of R.A. 1435 X 2Y'lo AMOUNT REFUNDABLE p 2,721.63 r As regards the 20% interest per annum being claimed by petitioner, the rule is that no interest on refund of tax .. ( .. .-

DECISION C.T.A CASE NO.3524 - Page21 - aw arde d unless authorized by law or the collection of the tax was attended by arbitrariness. /Collector v. Prieto, I 12 Phil. 907; Commissioner v. Asturi1s Sug1r Centr1/, 2 SCNA 1140; Commissioner of Internll Revenue v. Americ110 Rubber Co., I 8 SCRA 8 42; A Ills Fertilizer Corpor1tion v. Comm. issioner of Internii.Kevenue, 100 SCN.A 556; Shell P.!Jilippines, Inc. v. Centrll B110k of the Philippines, I 62 SCNA 628./ An action is not arbitrary when exercised honestly and upon due consideration where there is room for two opinions, however much it may be believed that an erroneous conclu sion w as reached. /P.O. Moreno, Philippine .l1F Oictionuy {.Jrd etl.), p . 69, citing ImperiJLI Development Corpor1tion v. Aliover, 0847.1-AP, Aug ust 2.1. 1979./ Arbitrariness pres upposes inexcusable or obstinate disregard of legal provisions. /Yictori�s Milling Co., Inc. v. Commissioner of Internv Jleve.noe", e t. II., I 9 SCNA -1.10./ None of the ex ceptions are pr c:sent in the case at bar. Respondent's decision denyi 1g petitioner 's claim for refund was based on an honest interpret ation of law. We, therefore, see no reason why petitioner should be entitled to the pay ment of interest. Moreover, the Supreme Court held in the Rio Tu ba case that no interest shall be charged in computing the 25% refund on specific taxes paid. JSee Supreme Court Resolution dated March 25, 1992. ] In the �ame manner, petitioner 's prayer for cost of suit cannot be awarded . It is an elementary ru Je that the government shall not be Hable for costs of suits unless otherwise provid/4

DECISION C.T.A CASR NO. 3524 - Page22 - law. /Secti on I, .Kule I -12, lievised .Kules of Court,- Col ector of Internlll .Kevenue v. Convention of Philippine Baptist Cburcbes II.Dd tlle Court of Tn- Appevs, 2 SC.NA /0_ / WHEREFORE, the respondent, COMMISSIONER OF INTERNAL REVENUE is hereby ordered to REFUND in favor of petitioner, ARAS -ASAN TIMBER CO.. INC., the sum of P2,721.63, without interest. equivalent to 25% partial refund of specific taxes paid on its purchases of regular gasoline, oils and lubricants, diesel and indush"ial fuel~ pursuant to the provision of Section 5 of Republic Act No. 1435. in relation to ection 142 (b) and (c) of the National Internal Revenue Code and Section 145 as prescribed under Sections 1 and 2 of R.A . 1435. No pronouncement as to costs. SO ORDBRBD. Quezon City. Metr ~L .GRUBA Associate judge WE CONCUR: Q~D~~ Presiding Judge �~ 1)2.1~~ RAMON 0 . DE .. A Associate Judg I

DECISION C:T.A. CASE NO. 3524 - Page23 - CERTIFICATION I hereby certify that this decision was reached after due consultation between the members of the Court of Tax Appeals in accordance with Section 13. Article Vlll of the Constitution. ~lQ.~ .ERNESTO D. ACOST A Presiding judge Court of Tax Appeals 1 l) 1 h