CTA Case No. 4183 (Decision)

REPUBLI C OF THE PHIL I PP INES COURT OF TA X APPEALS QUEZON CITV MOBIL PHILIPPINES, INC., Petiti oner, C.T.A. CASE NO. 4183 COMMISSIONER OF INTERNAL REVENUE, Respondent. )C - - - - - - - - - - )C D E C:: B X CJ N Thi� ca�e is about an essesr.�ent of' a 2~')(. surcharge iMposed against petitioner for the breach of Section 110 of the Ta>< Code, ar. .tuended, infra, hav ing failed to pay the addi tio na l a d valoreM ta><er. on t h e withdr wal of petrol euM p roducts wi th i n the tiMe prescr i bed. Petitioner corporation d uly inc or pora ted under the laws of the Phi 1 ippines is e ngaged in the marketing of av iation turbo Cj~ t > fuel , d i e s el, and bunker oil to internatio na l carri e rs . It procures the petroleuM products fro� the refinery of' Calte>< Phil ippiner., Inc., San Pascual, Batangas and/or Petitioner pays th e e><ci�e ta><er. <�pecif'ic and ad valorem> due on t h e petroleuM product� withdrawn froM the said refin er i ~s pursu a n t to the authority grant ed under h�tters dat ed SepteMber 1, 1983 and

DECISION CTA CASE NO. 4183 - 2- ' November 7, 1984 of the Deputy ComMissi oner of Internal Revenue. On Febt~uary 11, 1987 the Boat~d of Energ y (now Energy Regulatory Boat~ d> issued BOE Re~Jolution No . 87-02 increa~J ing the cost recovery of the oil companies on the vario us petroleu~ product~J refined or marketed by them by an a veraQe of 30.2 centavos <P0.302) per liter retroactive to January 1, 1987. On February eo, 1987 petitioner was assessed for the additional ad valorem ta><es <OMTD De�and No. OP-003-87) by reason of the aforesaid resolution for product withdraw 1 for the Month of January 1987 and which amount of P981,435.35 was paid by petitioner on March 12, 1987. ARain � on March 1G, 1987 BOE Resolution No . 87-03 was proMulgated which further increased the e><isting cost of recovery of the oil compan ies on the petroleuM prod ucts by an average of 54.7 centavos <P0.547> per liter retroactive to March 1, 1987. On April 24, 1987, respondent sent petitioner OMTD Demand No. OP-(11)8-87, st ating , "per BOE Reso ll\t ion Nos. 87-02 and 87-03 dated February 7, 1987 and March 1G, 1987, respectively, the post�d ~rice of your petroleum products subject to ad

DECISION CTA CASE NO. 4183 - 3- valorem tax and removed from January 1, 1987 to March 31, 1987 was increa~ed which corre~ pondingly increased your ad valorem tax liability. More than fifteen <15> days from the date of the af oresaid records do not show that you have paid the additional ad valore m tax cont!lequence thtB"eto." Hence, the demand for the payme nt of P1,305,455.7G plus P32G,363 .94 as the 25~ surcharge for failur to pay the deficiency tax due per BOE resolutions. On May 15, 1987, peti tio ner paid P1,305, 455.7G corre~p_onding to the ad ditional basic ad valore11 tax but protested and refu~ed the payMent of the 25~ surchargtt. Respondent denied the prot fUt' pet itioner filed the instant petition . The ca~ pr sent~ no dit!lpute as to the rel tively iMple material fact~ but the parties see trying to get the better of each other over by a quibble on the assesu1ent for a 25" surcharge prescribed under Section 110, Tax Code, as aMended, which read�� Sec. 110. Payment of excise taxes on domestic products <a> Pert!lons liable ' time of payment - Unless otherwis e espe-

DECIS I ON CTA CASE NO. 4 183 - 4- cially al l owed, exci~e taxes on domestic products shall be paid by the lllanufac- turer or producer before re moval fro111 the place of prod�Jcti.ont Provided, how ver, That excise tax on l ocally m<!\nufactm"'ed pet ro 1 e '-' "' prod �.tct <:: 1 P vied und IH"' Section 128 of this Titl r> c; h .~l l bP. paid wi thin f i f t e en <15) rt . y c:; f t~ o"' t h e d""' t e o f t"' emoval ther eof fro111 t he place of prod uction. Sh n �.1 ld dome '!> ti.c products be re moved from th " place of production wit hottt paymen t o f t h e t C~.x , the ownet"' or pers on h aving p ~ ~ p~~ 5ion t h ~ reof shall be 1 iab le for the t�"'- ' ' rl u e. Petiti oner addi t ional ad valorem tax was not P"'i d with in the 15- day period from removal of the products made subject to tax as required by Section 110, Tax Code, as a mended, "because the adjustment in the tax base resu lting from th adj u stment o f' the posted price ltnder BOE Res o htti o n!J d a t e d F P- ~w uary 11, 1987 and March 16, 1987 were post factn or retroa c t ive to Jatnuary 1, 1987 . At that ti111e the excise t x or d valorem tax on the prod �Jcts ~., ere due <which was 15 day s after re�oval of the products>, the add itional tax base was not yet in existence, hence we could not pay the appropriate tax due per BOE Resolution. Therefore, to requ ire as <sic> to pay the 25~ surcharge for pay111ent beyond the 15- day period required in said Sec. 110, Ta x Code, as a� ended would be unfair and arbitrary."

DECISION CTA CASE NO. 4183 - 5- Respondent cono;idP.rs pf>titione t"' s pay11 ent of P1,305,455.76 reprE'sont\nq thr hasic additional ad valorem ta><es for the products withdrawal during January to March 1987 beyond the statutory limit tion, "The excise ta>< on locally 111anufactured pet ro 1 e l.tlll products levied under Section 128 of th i~ Tit le should be paid within fift een (15) days fro the date of re111oval thereof � from the place of pr od �.tct ion <Sec. 110, supra)." Hen ce the imposit ion of the 25~ surc harge for having failed co111pli ance. The date of the re111oval of the petroleu111 products involved was dee111ed by the respondent to be the date of the pro11ulgation of the BOE resolutions . We reach the s ame co nclusion as the respondent Commissioner of Internal Revent.\e since the liability for the ddi t ional ad va lorem taxes arose as a consequence of the prom ulgation of the aforesaid BOE resoluti on and was deterMinable only at that t i 111e. The sprouting iMpression broached by the petitioner that it did not pay the additional ad valor�� ta><es per BOE resolutions within the 1~-day period fro� date of re111oval of the petroleu� ~roducts as required under Section 110 on the 140

DECISION CTA CASE NO. ~183 - G- ~round that the postPd pri ce was not ye t in existence, c!\n h al�dly ~)flO ~ rtH.\ 'li!Htr in~ prospec t that can r~ad i l y b t"&concilttd with the circumst ances obt aining. pl<ll inly by the respon de nt , "the BOE Resolutions <!l.re invaria bly the result of notices and hea~"'in~ on the petitio n of the oil campan ia �, which seeks amendment of Sect ion 128 of the Tax Codr. Hence, i t w~s the groups of oi l companies, petitionf!r in th"s ca'.!le being noj:_ eJ�c~ltde.d, that provir.1t? t ile Bm:. Amonq others, with fiqures used as basis in analy zi ng the correct n ess of th!! p titiof\ mount of o il compan y reco very to be added to the cu~.. rent oil comp Any taken <s ic) in ar""'iving at the po111ted price, increase in cost of S O fO"'tho II It or d 11 i ty to think that the petitioner could !!till fe iqn i. qnor~n c e as to thtt exist nee of th post~rl p r ic e ~f ny part cu lar oil product and the period co vered by the increas e of IUI\id particulal"' product as well as the date of is u ance of the BOE Re s olutio n Nos. 8 7-02 and 87-03 on Fe brltary 11' 1987 and March 1E., 1967, respectively. Ludicrous and expedient pi f f l e indeed if such actua l knowledge of the facts c annot 14 1.

DECISION CTA CASE NO. ~183 - '7 - be infused valid coqni:!ance under relevl!lnt legal standards unless petitioner i s unwillinq to tak e responsibility or simply unable to di scern what they are. Petitioner has �tumbled on its own preRiise. All told, petitioner paid the deficiency ad v lor m tax in th amount of P1,305,455. 76 only on rRore th an fiftefHl days aft er the 11, 1987 ~nd MArch 16, 1987, respectively, and only afte r it received rtHipond nt's lett�r of demand dat ed April 24, 1987. So it ppeArs and We so hold that far fro� a comedy of Commis!lioner of Inte~~ nal Rev�nue ha!l 1'\l:lt fumhlNi into a pr~ ecipi tate action in demMnding the payment of P326,363.25 representin~ the 25~ surcharge con~is tent with the st t \tory pro~eription. Certainly th law re quires no more end expects no less. ACCORDINGLY, p�tition is without aer it and is hereby disaissed with eosts. SO ORDE D.. Quezon City, Mfttl"'o M nil�, May 31, 1991.

.. . DECISION - CTA CASE NO. 4183 - H -- ~~\Q~C.~ ERNESTO D. ACOSTA AIIOci�te Judpe CE RT I F I CAT I 0 N I hereby cert i f y th t this decisi on was reached ~ft�r due consultation among the me~bers of th Court of Ta ~ Appeals in accordance with Section 13, Article VITI of the Constitution. t4 1 fl~. ~�/P~~~ngREYE _ J�.td Cour t of Ta x Ap pe�l�