CTA Case No. 3523 (Decision)

Republic of the Philippines COURT OF TAK APPEALS Quezon City '� ; .\. CDCP MINING CORPORATION. Petitioner, - versus - C.T.A. CASE HO. 3523 .. CXROEV-ME-MN-I-US-ES-.IO-N--ER---OR-Fe-s-IpN-oT-nE-dR-eN-nA-t L.----------P-r-o-�A-uU-lGg--a-Qt e9-d1:-99-4 --~ --~ DEC I s I 0 N Petitioner seeks to recover 25Y. of the specific taxes paid on various oils and fuels actually used in the exploitation and operation of its mini ng lease pursuant to the provision of Section 5 of Republic Act No. 1435 in relat i on to Sections 153 and 156 (formerly Sections 142 and 145, respectively> of the National Internal Revenue Code of 1977; as amended. Pet i tioner is a domestic corporation d~ly licensed to engage in m; ning operations. It has a Mining Lease Contract duly entered into wi th the Ministry of Natural Resources. '7 25

- DECI S I 0 H - C.T.A. Case Ho. 3523 -2- In order to effectively operate its mining concession petitioner uses refined and manufactured mineral oils, motor fuels and diesel fuel oils in its mining operations. From July 1, 1980 to June 30, 1982, petitioner paid the corresponding specific taxes on its purchases of diesel fuel oils, motor fuels, manufactured mineral oils from Mobil Oil Philippines, Inc. and Caltex Philippines. <Exhibit D, for the petitioner) In view of the provision of Section 5 of Republic Act No. 1435 <An Act To Provide Means For Increasing lI The Highway Special Fund> and the decision of the Supreme Court in the case of Insular Lumber Co. v. Court of Tax Appeals, G.R. No'�. ' L-31057, May 29, 1981 <104 SCRA 710>, petitioner claimed entitlement to the 25Y. partial refund on the specific taxes paid on manufactured mineral oils and fuels actually used in its forest operations. Petitioner filed a claim for refund <Exhibit AH>, dated September 1, 1982 with the respondent's office in the total amount of P9,962,299.71, computed as follows: <Exh. AH-1-a) ,, 726

- DE C I S I 0 N- C.T.A. Case No. 3523 -3- ��, Co r p o r a t i o n C DCP Hi n i n g .~ Jul y 1980 - J une 19 8 2 Volu.e Product S~ific 25X Litera Cost Tax Refund Diesel 13, 473,134 p 37,213,419.77 p 2,357, 798.45 p 589, 449.61 Oil & Lubricants 46, 279,650 96, 439, 892.16 37,023,720.42 9, 255,930.10 Regular 146,000 717,610.60 131,400.00 . 32,850.00 Gasoline Extra 300,000 1, 484,860.80 300,000.00 75, 000.00 Gasoline Kerosene 72,000 202,660.20 5,040.00 1,260.00 Grease 62, 480 313, 273. 80 31, 240.00 7,810.00 p 136, 371,717.53 p 39, 849, 198. 47 p 9, 962,299. 10 --------------- --------------- -------------- ln order to support its claim for refund, petitioner presented the affidavits of its Senior Vice-President. <Exh. AH-1 >, Purchasing Manager <Exh. AH-2>, Comptroller <Exh. AH-3>, and two other disinterested persons <Exhs. AH-4 and AH-5 >. Without waiting for respondent's decision on the matter, petitioner filed a petition for review in order to stop the running of 'the two ( 2) year prescriptive period within which to judicially claim a refund under Section 230 72 7

- DEC I S I 0 N- C.T.A. Case No. 3523 -4- <�ormerly 292) o� the National Internal Revenue .Code. Petitioner prayed �or an order requiring respondent to pay 20/. interest per annum, in addition to its claim �or re�und �or his alleged arbitrary re�usal to re�und the instant claim. Petitioner likewise prayed �or the costs o� suit. Section 5 o� Republic Act No. 1435 provides: �section 5. The proceeds o� the additional tax on manu�actured oils shall accrue to the road and bridge �unds o� the political subdivision �or whose bene�it the tax is collected: Provided, however, That whenever any oils mentioned above are used by miners and �orest concessionaires in their operations, twenty-�ive per centum o� the speci�ic tax paid thereon shall be re�unded by the Collector o� Internal Revenue upon submission o� proo� o� actual use o� oils and under similar conditions enumerated in sub-paragraphs one and two o� section one hereo�, amending section one hundred �arty-two o� the Internal Revenue Code: Provided, �urther, That no new road shall be constructed unless the routes or location thereo� shall have been approved by the Commissioner o� Public Highways a�ter a determination that such road can be made part o� an integral and articulated route in the Philippine Highway System, as required in Section twenty six o� the Philippine Highway Act of 1953." In the cases o� Insular Lu�ber Co�pany v. Co urt o f Tax Appeals and Co��issioner of Internal 728

- DEC I 5 I 0 N- C.T.A. Case No. 3523 -5 - ., Revenue, G. R. No, L- 31057, Kay 29, 1981 and Commissioner o:f Internal Revenue vs. Court o:f Tax Appeals and Insular Lumber Company, G. R. No. L- 31137, Kay 29, 1981, 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. On this account, petitioner claimed entitlement on the refund sought for based on the above mentioned decisions, as well as the provision of Section 5 of Republic Act No. 1435. After an answer has been filed respondent rendered a final decision, dated January 2 , 1984, denying petitioner's claim for refund <Exh. Al). Petitioner presented and formally offered its evidence without any objection on the part of the respondent. Respondent added that the law <R. A. 1435) relied upon by petitioner had been repealed by Presidential Decree No. 231, otherwise known as the Local Tax Code and Presidential Decree No. 426, amending Presidential Decree No. 231, and 729

- DEC I S I 0 N- C.T.A. Case No. 3523 -6- its implementing regulation speci�ically Local Tax . Regulations No. 1-74. Furthermore respondent argued that even be�ore the repeal o� Republic Act No. 1435 petitioner cannot avail the privilege under Section 5 thereo� in the absence o� any allegation regarding payment o� the additional tax under a municipal or city ordinance as indicated in Section 4 o� the same act. He pointed out that Section 4 must be read in relation to Section 5. S ec. 4 o� Republic Act No. 1435 inso�a~ as pertinent provides: �section 4. Municipal boards or councils may, notwithstanding the provisions o� sections one hundred and �arty - two and one hundred and �orty - �ive o� the National Internal Revenue Code, as herein above amended, levy an additional tax o� not exceeding twenty - �ive per cent o� the rates �ixed in said sections, on manu�actured oils sold or distributed within the limits o� the city or municipalities: Provided, That municipal taxes hereto�ore levied by cities through city ordinances on gasoline, airplane fuel, lubricating oil and other fuels, a~e hereby ratified and declared valid. The method o� collecting said additional tax shall be prescribed by the municipal board or council concerned. 730

- DEC I S I 0 N- C.T.A. Case No. 3523 -7- Respondent �urther added that subsequent to th~ eriactment o� R.A. 1435, the rates o� speci�ic tax on oils were increased on several occasions because o� the issuance o� various presidential decrees and executive orders, in view o� this the re�und privilege are deemed revoked. Respondent asserts that Sections 4 and 5 o� Republic Act No. 1435 have been repealed by Section 343 o� the National Internal Revenue Code o� 1977 <Presidential Decree Nos. 1158 and 1158-A>, which is as �allows: �sec. 343. Granting provinces, cities and municipalities share in the speci�ic tax on certain petroleum products. - In addition to the internal revenue allotment under Section three hundred �orty-�our, provinces, cities and municipalities shall share in the speci�ic taxes on the �allowing petroleum product in such amounts as may be equivalent to the collections there�rom at the rates indicated hereunder: XXX XXX XXX The additional allotment is in lieu o� local taxes imposed on petroleum products and �or this purpose, Section twenty-�our o� Presidential Decree numbered 231, otherwise known as the Local Tax Code, has been repealed by Presidential Decree numbered 436 on March 30, 1974. XXX XXX XXX 731

- DECI S I 0 N - C.T.A. Case No. 3523 -8- Respondent further argued that petitioner's right � to claim a partial refund of specific taxes paid prior to October 8, 1982 had already prescribed. The issues brought before this Court are: 1. > Whether or not the privilege under Section 5 of R.A. 1435 had been repealed by P.D. No. 231 <Enactment of the Local Tax Code>, as amended by P.D. No. 426, and by P.D. Nos. 1158 and 1158-A <Consolidating and codifying all Internal Revenue Laws> particularly Section 342 of the National Internal Revenue Code of 1977; and 2. > Granting arguendo that the privilege under Section 5 of R.A. 1435 has not been repealed, whether 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 R.A. 1435. Going over the first issue, respondent contended that with the passage of various Presidential Decrees and Executive Orders, increasing the rate of specific taxes under the National Internal Revenue Code it impliedly revoked the partial refund privilege under Section 5 of R.A. 1435. Respondent maintained that the very . purpose why the government increased the rates of specific taxes is to provide additional revenues to 73 2

- DEC I S I 0 N- C.T.A. Case No. 3523 -9- accelerate economic development in the country. In this regard, the grant o� partial re�und would there�ore run counter to the very purpose �or which the speci�ic tax rates were increased. The Court has this to say. As enunciated in the case o� Co��issioner of Interna1 Revenue v. At1as Conso1idated nining and Deve1opment Corporation, et. a1., G.R. No. 93631, November 12, 1990, the Supreme Court said that "the purpose �or the increase in the rate o� tax cannot in anyway negate the policy behind the grant o� partial re�und. The Court sees no inconsistency between the increase in speci�ic tax rates on the retention o� the re�und privilege. In �act, with the increased speci�ic tax rates, the grant o� partial re�und to mining and lumber concessionaires is made more imperative considering that they seldom use the highways, the construction o� which are �inanced by speci�ic taxes." Moving over to the second issue, respondent argued that petitioner is entitled to ~ re�und only i� the additional speci�ic taxes imposed by the municipalities and cities concerned have been paid. n t h is a cco unt petitioner asserts that where there i s n o s uch ordinance imposing an additional 733

- DEC I S I 0 N- C.T.A. Case No. 3523 - 10 - specific tax to miners and forest concessionaires, no refund could be utilized as perceived from the reading of the provisions of Sections 4 and 5 of R.A. 1435 taken as a whole. We find i t imperative to pass upon the pronouncement of the Supreme Court in the case of Commissioner of Internal Revenue v. Atlas Consolidated Mining and Development Corp. et. al., supra: "A reading of the legislative proceedings leading to the enactment of R.A. 1435 shows that miping and lumber concessionaires were granted partial refund of specific taxes because the gasoline and fuel they consume is mostly used within their own compounds and roads. R.A. 1435 gave these concessionaires relief, in the form of a tax refund, since their trucks and vehicles seldom ply the national highways, the 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 who collects the specific taxes due to the national government, then it �allows 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. " 734

- DECI S I 0 N- C.T.A. Case No. 3523 - 11 - As cited in the case o� Commissioner o� Internal Revenue v. Rio Tuba Nickel Mining Corporation and the Court o� Tax Appeals, G.R. Nos. 83583-84, September 30, 1991, <202 SCRA 137> it was held that "Section 5 o� R.A. 1435 standing alone is enough basis �or granting the re�und. Section 5 does not make any re�erence to Section 4 which empowers municipalities and cities to impose the additional tax on oils sold or distributed within their territorial jurisdiction." What is clear therein is that the Revenue Commissioner shall re�und 25Y. o� the speci�ic tax whenever any oils mentioned above are used by miners or �orest concessionaires in their operations and the procedure �or re�und is complied with. In view o� its proper entitlement to the relie� sought �or, the only thing le�t to be determined by this Court is the amount o� speci�ic taxes to be re�unded in �avor o� petitioner. Petitioner claims that it is entitled to the � 25Y. partial re�und o� speci�ic taxes paid �rom its purchases o� re�ined and manu�actured �uel oils, diesel �uel oils and lubricating oils �rom u ly 1 , 1980 to June 30, 1982. 73

- DECI S I 0 N- C.T.A. Case No. 3523 - 12 - In its Memorandum, petitioner presented the Table d� its Summary o� Oil products purchases and consumption �rom July 1980 to June 1983. Respondent maintains that assuming �or purposes o� argument that the privilege o� partial re�und o� speci�ic tax still subsists, petitioner's claim �or re�und may be granted only up to the amount equivalent to 25X speci�ic taxes paid �rom October 8, 1980 to June 1982 inclusive. Additionally, petitioner's right to �ile a judicial action �or the re�und o� the speci�ic taxes paid be�ore October 8, 1980 has already prescribed pursuant to Sec. 243 o� the NIRC as amended. Moreover, it's claim �or re�und o� speci�ic taxes paid a�ter June o� 1992 should likewise be denied as the same is not the subject matter o� petitioner's written application �or re�und dated Sept. 1, 1982, nor is it the subject matter o� the instant petition �or review. The Tax Code provides �or the judicial remedy o� �iling a claim �or re�und within a period o� two (2) years �rom the date o� payment o� the tax pursuant to the provision o� Section 230 ( � ormerly Section 292>. 736

- DEGI S I 0 H - G.T.A. Case No. 3523 - 13 - Section 135 o� the Tax Code inso�ar as . .._ ~ertin~nt to the resolution o� the case is herein quoted which provides "that speci�ic taxes on locally manu�actured petroleum products levied under Section 153, 155 and 156 o� this title, except lubricating oil and grease, shall be paid within �i�teen <15) days �rom the date o� removal thereo� �rom the place o� production. n From this the manu�acturer o� petroleum products has up to 15 days within which to pay the speci�ic taxes on locally manu�actured petroleum products �rom the date o� its removal. By way o� exc eption, manu�acturers o� lubricating oils and grease have to pay the speci�ic tax collected �rom the purchaser on the date o� its removal �rom the place o� production. Petitioner purchased both manu�actured petroleum products and lubricating oils. Thus, with respect to its purchases o� lubricating oils, the speci�ic taxes paid thereon are deemed paid at the date o� its removal. The claim �or re�und of the 25Y. spec l �ic taxes paid on oils and lubricants purch a sed and delivered prior to October 8, 1980 h a d i ndee d prescribed . 73

- DEC I S I 0 N- C.T.A. Case No. 3523 - 14 - Following the provision o� Section 135 o� the Tax Code, the speci�ic taxes paid on the rest o� the petroleum products purchased by petitioner �alls due on the 15th day �ollowing the date o� its removal. There� ore, all shipments o� petroleum products, except oils and lubricants, paid by petitioner 15 days prior to October 8, 1980 or on September 23, 1980 are deemed paid on October 8, 1980 which is well within the two-year prescriptive period as prescribed under Section 230 o� the National Internal Revenue Code. <Exhs. E-3 to E-22, K- 1, K- 4, L - 5, L- 6, L - 9, L - 10, M- 16 to M-38, M-40 to M- 50, M-52, M-53, 0 - 459 to 0 - 520, 0-523 to 0- 525, P - 4, P - 5> The speci�ic taxes collected �rom petitioner on its purc hases o� petroleum products other than oils on September 23, 1980 shall be paid within 15 days �rom the date o� its removal or on October 8, 1980. It �allows that on Octo ber 8, 1980, all purc hases o� locally manu�ac tured petroleum products, except oils, on September 23, 1980 are deemed paid. Thus, all purch~ses o� �uels prior to September 23, 1980 have prescribed. All claims not included in the claim �or re�und �iled in the administrative level <BIR> 738

- DEC I S I 0 N - C.T.A. Case No. 3523 - 15 - cannot be the subj ect o� the present appeal. Thus, .~ purchases o� petroleum products and lubricants made a�ter June 30, 1982 , not being included in the claim �or re�und �iled with the respondent's o��ice, cannot be considered by this Court �or the same was not included to �arm part o� its claim �or re�und with the BIR nor o� this petition �or review. The petition calls �or the re�und o� 25Y. o� the speci�ic taxes paid on petitioner's purchases o� manu�actured oils and �uels �rom July 1, 1980 to June 30, 1982 and not purchases o� �uels �rom July 1, 1980 to June 30, 1983, as prayed �or in the Memorandum <Ex hs. 0 - 10 to 0-453> As enunciated in the case o� Commissioner o� Internal Revenue v. Rio Tuba Nickel Mining Corporation and Court o� Tax Appeals, supr a. the Supreme Court granted Rio Tuba's motion �or reconsideration o� its decision dated September 30, 1991. The High Court in its Resolution dated March 25, 1992 arrived at the �ollowing conclusion, which is as �ollows: "Since the p r ivate ~ esponden t ' s c a i m � o r r e�und covers spe ~ i�i c ta xe s a d � rom 1980 to July 1983 } hen we � ind t~a t t he p ri va t e respondent is e nt i t le d t a re �und. It should be made .c le ar , ho.� e ve r , th at Rio Tuba is not e n t it l~ d to t he whole a mount it claims as r e � u nd .

- DECI 5 I 0 N- C.T.A. Case No . 3523 - 16 - The specific taxes on oils which Rio Tuba paid for the 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, that the latter law 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 Lumber Co. v. Court of Tax Appeals, <104 SCRA 710 [1981J>, 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 therefore cannot be allowed unless granted in the most explicit and categorical language. Since the grant of refund privilege must be strictly construed against the taxpayer, the basis for the refund shall be the amounts deemed paid under Sections 1 and 2 of R.A. No. 1435. Accordingly, the decision in G.R. Nos. 83583- 84 is hereby MODIFIED. The private respondent's claim for refund is granted, computed on the basis I f t he a mounts deemed paid under Sections 1 and 2 o f R. A. 1 435 , with out interest. 740

- DEC I S I 0 N- C.T.A. Case No. 3523 - 17 - So Ordered. " The above mentioned ruling was �urther discussed by the Supreme Court in reply to Rio Tuba 's motion �or clari�ication which is in �act a second motion �or reconsideration. The Court in its resolution dated June 15, 1992 has the �allowing comments to wit: Rio Tuba's contention that the re�und should be based on the rates e��ective at the time the speci�ic tax was paid is without merit. Section 1 o� R.A. 1435 amended Section 142 o� the National Internal Revenue Code providing �or increased rates on speci�ic taxes paid on manu�actured oils which are used in agriculture and aviation Section 5 o� R.A. 1435 amended Section 142 o� the National Internal Revenue Code provided �or a re�und privilege on speci�ic taxes on manu�actured oils paid by miners or �orest concessionaires. There is a di��erence in the re�und privileges o� those engaged in agriculture and aviation on one hand, and miners or �orest concessionaires on the other. Since the re�und privilege o� the �ormer is incorporated in Section 142, then upon any amendment o� Section 142 increasing the tax rates, the basis �or the re�und will accordingly be adjusted. Signi�~cantly, the re�und privilege granted to min ers or �orest concessionaires i s not i ncorpor a ted in Section 142 but is � ou d in S e cti o n 5 o � R. A. 1435. There is thu s a n i n t ent on t he pa rJ o� the l e gis lature to use the s pe c j � ic tax 741

- DEC I S I 0 N - C.T.A. Case No. 3523 - 18 - rates provided in Section 1 as the sole basis �or re�und, notwithstanding �uture rate increases. All the Sections o� R.A. 1435 must be read as a whole. In the absence o� any express provision o� law, the re�und privilege granted to miners and �orest concessionaires in Section 5 must be construed as based on the speci�ic tax rates provide d in Section 1. Regarding the Commissioner o� Internal Revenue's <CIR's> contention in his motion �or reconsideration that R.A. 1435 had become an anachronism way back in 1973 when the legislature provided �or incr eased speci�ic tax rates on manu�actured oils, said position that a partial re�und would be inconsistent with the purpose o� the subsequent laws increasing speci�ic tax rate is without merit. The re�und privilege is not inconsistent w~th the increase in speci�ic tax rates since the re�und is based only on the original rates provided in Section 1 o� R.A. 1435. These subsequent laws did not, there�ore expressly or impliedly, repeal t he re�und privilege. X XX XXX XXX 742

- DEC I S I 0 N- C.T.A. Case No. 3523 - 19 - The Court, a�ter examining the invoices offered by petitioner as evidence, arrived at the following computation on the refundable 25X specific taxes paid on Diesel, Gasoline, Fuel, oils, kerosene from September 23, 1980 to June 30, 1983, and oils, lubricants and grease from October 8, 1980 to June 30, 1982 as follows: Oils and Extra Regular Diesel Lubricants Gasoline Gasoline Fuel Oil Grease Kerosene Folder 11 2,861,082 981,668 20,000 20,000 5,024,332 420 10,000 Folder 12 3,886,919 533,965 116,000 22,000 16,196,251 10,250 42,000 Folder 13 1,406,640 429,640 104,000 32,000 7,351,991 3,570 Folder 14 219291695 1941510 14,240 101000 TOTAL 11,084,336 2,139,783 521000 221000 510311652 62,000 292,000 96,000 33,604,226 ------ ---------- --------- ------ ------- ------ ---------- The Resolution of 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 amounts deemed paid under Sections 1 and 2 of R.A. No. 1435, without interest. Section~ 1 and 2 of R.A. 1435 insofar as pe r ti nent provides: 8 Sec t i o n 1 . Section one u d r e d a n d f o rty- tw o of t hti Nat i onal I nte r n al Re venue Code p as amended , is fu r t h e r a mended to read as f llows: (43

- DEC I S I 0 N- C.T.A. Case No. 3523 - 20 - Sec. 142. Speci�ic Tax on on manufactured oils and other fuels. oils be refined and manufactured mineral and motor fuels, there shall collected the following taxes: <a> XXX XXX XXX ( b) Lubricating oils, per liter of volume capacity, seven centavos; <c> Naptha, gasoline, and all other similar products of distillation, per liter of volume capacity, � eight centavos; and (d) XXX XXX XXX �section 2. Section one hundred and :forty :five o:f the National Internal Revenue Code, as amended, is :further amended to read as :follows: �sec.145. Speci:fic Tax on Diesel Fuel Oil. - On :fuel oilt 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 re:fundable on purchases o:f diesel and industrial :fuel, both parties agreed and arrived at a :formula, in converting liters o:f diesel and industrial :fuel to metric tons. The base :for compu~ing the amount re:fundable ~ or speci:fic taxes :paid on diesel and i ndustri al :fuel should be that as pr escribed in Se ct ion 2 o:f Rep ublic Act No. 1435. Th e :formula to 744

- DECI S I 0 N- C.T.A. Case No. 3523 - 21 - ��, convert liters to metric tons o� diesel and 1ndustrial ��uel as agreed upon by the parties is: No.o� liters x Speci�ic Gravity= Metric Ton 1,000 It was �urther agre ed that the speci�ic gravity o� diesel is 0.8429. While the speci�ic gravity o� industrial �uel is 0.9439. Thus, the total number o� liters o� diesel subject to re�und is 12,863,111 equivalent to 10,842.32 metric tons, computed as �allows: 11,084.336 X 0.8429 = 9,34.9868 1,000 While the total number o� liters o� �uel oil subject to re�und is 40,396,128 equivalent to 38,348.04 metric tons, computed as �allows: 34,552,294 X 0.9439 = 32,613.9103 1,000 A�ter having converted the liters o� diesel and �uel oils into metric tons, the Court can now compute the amount to which petitioner is entitled to be re�unded on the speci�ic taxes paid . �rom the '7 45

- DE C I S I 0 N- C.T.A. Case No. 3523 - 22 - .-, use of petroleum products purchased for the period �covering September 23, 1980 to June 30, 1982. Petitioner is entitled to the amount of P38,461.86 computed by the Court, as follows: llanufactured Quantity Specific Specific Tax Under Oils Tax Rate Sees. 1 l 2, RA 1435 t 9,342.99 liT p 9,342.99 79,300.55 Diesel 23,360.00 7,680.00 Oils and Lubricants 292,000 L 0.07/L 32,613.91 1,550.00 Extra Gasoline 96,000 L 0.08/L p 153,847.45 Regular Gasoline 31,719 liT 1. 00/IIT 25% t 14,240 L 0.07/L p 38,461.86 Fuel Oils Kerosene 62,000 L 0.025/L TOTAL SPECIFIC TAX PAID llultiply by percentage refundable under Sec. 5 of RA 1435 TOTAL AIIOUIT REFUJIDABLE Refundable Amount of 25X Specific Taxes Paid on Regular Gasoline, Oils and Lubricants, Diesel and Industrial Fuel Oil Purchased from Per Court's Computation based on Sees. 1 and 2 of R. A. 1435. As regards the 20X interest per annum being claimed by petitioner, the rule is that no interest on refund of tax can be awarded unless authorized by law or the collection of the tax was attended by arbitrariness. �Co11ector v. Prieto, 112 Phil. 907i v . Ast urias Sugar Centra1 , 2 SCRA 1140i Commi ssi oner o f Interna1 Revenue v. A�erican R ub ber Co. � 1 8 SCRA 842 i At1as Ferti1izer Cor p orati on v. Commissi oner of Inter n a 1 Revenue, 74

- DE C I S I 0 N- C.T.A. Case No. 3523 - 23 - .�, 100 SCRA 556r She11 Phi1ippines, Inc. v. Centra1 Bank ox the Phi1ippines, 162 SCRA 628.1 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 conclusion was reached. �F.B. noreno, Phi1ippine Lar Dictionary <3rd ed. >, p. 69, ,,� citing Imperia1 Deve1opment Corporation v. Anover, 08473-AP, August 23, 1979.1 Arbitrariness presupposes inexcusable or obstinate disregard of legal provisions. [ Victorias lli11ing Co. , Inc. v. Co��issioner of Interna1 Revenue, et. a1. 19 SCRA 430. ] None of the exceptions are present in the case at bar. Respondent's decision denying petitioner's claim for refund was based on an honest interpretation of law. We, therefore, see no reason why petitioner should be entitled to the payment of interest. Moreover, the Supreme Court held in the R{o Tuba case that no ~nterest shall be charged in computing the 25X refund on specific taxes paid. [See Supreme Court Resolution dated March 25, 1992.] In the same manner, petitioner's prayer for cost of suit cannot be awarded. It is an 7 4'7

- DEC I S I 0 N- C.T.A. Case No. 3523 - 24 - elementary rule that the government shall not be liable for costs of suits unless otherwise provided by law. [Section 1, RuJe 142, Revised RuJes of Court; CoJJector of InternaJ Revenue v. Convention of PhiJippine Baptist Churches and the Court of Tax AppeaJs, 2 SCRA 10.1 WHEREFORE, the respondent, Commissioner o� Internal Revenue is hereby ordered to REFUND in favor o� petitioner CDCP Mining Corporation, the sum of F38,461 . 86 without interest, equivalent to 25X partial refund of specific taxes paid on its purchases o� gasoline, oils and lubricants, diesel, fuel oils, and kerosene pursuant to the provision of Section 5 o� Republic Act No. 1435, in relation to Section 142 <b> and (c) of the National Internal Revenue Code and Section 145 as prescribed under Sections 1 and 2 o� R.A. 1435. No pronouncement as to costs. SO ORDERED. Quezon City, Metro Manila. GRUBA Judge 748

- DEC I S I 0 N- C.T.A. Case No. 3523 - 25 - ��, WE CONCUR: . \. Q .. ~ TO D. ACOSTA esiding Judge I"'~ RA ON 0. DE A Associate Ju e CERTIFICATION I hereby certify that this decision was reached after due consultation among the members of the Court of Tax Appeals in accordance with Section 13 Article VII of the Constitution. ~0~ ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals