Mobil Philippines, Inc. v. Commissioner of Internal Revenue

[CA-G.R. SP No. 25791. March 31, 1992.] (C.T.A. Case No. 4183) MOBIL PHILIPPINES, INC. , petitioner , vs .COMMISSIONER OF INTERNAL REVENUE AND THE COURT OF TAX APPEALS , respondents . D E C I S I O N CAMILON , J p : Petitioner is a corporation engaged in marketing aviation turbo (jet) fuel, diesel, and bunker fuel oil to international carriers. It procures its supply of the said fuel products from Caltex Philippines Inc. (Caltex) from the latter's refinery in Batangas and/or from Caltex's entitlement to processed products from the Bataan Refinery of the Bataan Refining Corporation at Limay, Bataan. On February 11, 1987, Board of Energy (BOE) Resolution No. 87-02 was passed pursuant to Letters of Instructions (LOI) No. 1441 dated November 20, 1984, increasing by an average amount of 30.2 centavos (P0.302) per liter the cost recovery of oil companies on the various petroleum products refined and/or marketed by them locally. The effectivity of the resolution was made to retroact to January 1, 1987. A copy thereof was received by petitioner on February 16, 1987. On March 16, 1987, BOE Resolution No. 87-03 was passed also pursuant to LOI No. 1441, again increasing the cost recovery of oil companies on the different petroleum products by 54.7 centavos (P0.547) per liter of product sold. The effectivity of the resolution was made to retroact to March 1, 1987 and a copy thereof was received by petitioner on March 18, 1987. On February 20, 1987 a demand letter was sent to the petitioner by the Bureau of Internal Revenue (BIR),demanding payment of the amount of P981, 435 for the month of January, 1987, resulting from the corresponding change in the ad valorem tax of the different petroleum products brought about by BOE resolution No. 87-02. The aforementioned amount was paid by petitioner on March 12, 1987. On April 24, 1987, a demand letter was again sent by the BIR to petitioner demanding payment in the amount of P1,305,455.76 for the petroleum products removed from January 1, 1987 to March 31, 1987. A 25% surcharge or P326,363.94 was also demanded from the petitioner because of the latter's failure to pay the additional ad valorem taxes within fifteen (15) days from the date of the aforementioned BOE Resolutions. On May 15, 1987, the amount of P1,305,455.76 pertaining to the additional ad valorem tax was paid by petitioner. Instead however of paying the 25% surcharge, petitioner protested its imposition on the ground that at the time the ad valorem tax on the products were due (which is fifteen days from removal of the products),the additional tax base was not yet in existence, and as a result, it could not have incurred in delay. In reply, the BIR, on July 13, 1987, informed petitioner that the latter being a party in the process of determining the increase of the tax rates on manufactured oils and fuels, it could not claim unawareness of the existence of the posted price of any particular oil product and the period covered by the increase as well as the dates of the Resolutions. As a result, the payment of the 25% surcharge was reiterated and petitioner was given ten (10) days from July 13, 1987 with 20% interest from due date to the date of the payment. Petitioner filed a petition for review with the Court of Tax Appeals (CTA) which however affirmed the decision of the Commissioner dated July 13, 1987. Thus, the instant petition. The issue involved in this case is whether or not it was proper for the respondent Commissioner to impose the civil penalty of a 25% surcharge by reason of the petitioner's failure to pay additional ad valorem taxes on its withdrawals of petroleum products during the period from January 1, 1987 to March 31, 1987 within fifteen (15) days from the dates of BOE Resolution Nos. 87-02 and 87-03. An ad valorem tax is a kind of excise tax which is imposed and based on the selling price or other specified value of the goods (Sec. 126, NIRC). Said tax, In the case of locally manufactured petroleum and indigenous petroleum, shall be paid within fifteen (15) days from the date of removal thereof from the place of production (Sec. 110). In the case at bar, the excise taxes for petitioner's removals for the period of January to February, 1987 previous to the issuance of BOE Resolution No. 87-02, were duly paid. Thereafter, the excise taxes for removals made in the month of March, 1987, previous to the issuance of BOE Resolution No. 87-03, were likewise paid. The problem arose from the declared retroactivity of the said Resolutions to January 1 and March 1, 1987, respectively. The respondents claim that the fifteen day period for payment of the adjusted ad valorem tax should commence from the dates of the resolutions which are to be considered as the dates of removal. Since the petitioner did not pay for the adjusted ad valorem tax within fifteen (15) days from the issuance of the Resolutions, it was therefore deemed to have been in delay in the payment of the excise tax due and should therefore be liable for the payment of a 25% surcharge. A surcharge is an amount imposed by law as an addition to the main tax in case of delinquency. Section 282 of the 1987 Tax Code provides that a penalty equivalent to 25% of the amount due shall be imposed in case of failure to pay the tax within the time prescribed for its payment ,among others. In other words, they are imposed in case of delay in the payment of the tax due. In the case at bar, the petitioner is not guilty of delay in the payment of the adjusted excise tax for the reason that there was no period specified in the Resolutions for the payment of said taxes. One cannot incur in delay when there is no period fixed for payment. The petitioner also did not incur in delay since the excise taxes due on the withdrawals it made in the months of January, February, and March, previous to the effectivity of the Resolutions in question were duly paid. As regards the adjusted ad valorem tax, the petitioner likewise paid the same after demand was made by respondent. The period provided for in the Tax Code cannot be made to apply in the case of the adjusted taxes which were made retroactive to January 1 and March 1, 1987 for the reason that such period refers to the "actual" removal of the products. In this case, the fifteen day period from the actual removal of the petroleum products had already elapsed even prior to the issuance of the resolutions aforementioned. Respondent Commissioner claims the date of the Resolutions to be, by inference, the date of removal of the products (Attachment B, Petition).It is however the established rule in the interpretation of tax statutes not to extend their provisions by implication (Marinduque Iron Mines vs. Municipal council of Hinabangan, et al.,11 SCRA 416),beyond the clear import of the language employed, or to enlarge their scope as to include matters which are not specifically pointed out. In case of doubt, they are construed most strongly against the government (Ruperto G. Martin, supra ;Manila Railroad Co. vs. Coll. of Customs, supra ). Taxes being burdens, they are not to be presumed beyond what the statute expressly and clearly declares (Collector of Internal Revenue vs. La Tondea, Inc., 53 SCRA 665; Marinduque Iron Mines Agents, Inc. vs. Municipal Council of Hinabangan, supra ). Respondent also stresses the fact that petitioner was a party to the hearings held in connection with the imposition of the additional tax adjustment. There was however no proof that it was specified during those hearings that the adjusted tax pertaining to products already removed upon the issuance of the Resolutions and for which excise taxes based on the old rate have already been settled, should be paid within fifteen (15) days from the issuance of the resolution. And, it cannot be over-emphasized, that at the time of withdrawals, the additional tax base was not yet in existence and the liability therefore accrued only after the BOE Resolutions and more importantly, after the withdrawals. In consonance with the jurisprudence cited above, in case of doubt, tax statutes should be construed strictly against the government. Statutes creating a new liability or increasing an existing liability are strictly construed in favor of persons sought to be subject to their operation and will not be extended to include liabilities other than those designated as fairly within its terms ( Ruperto G. Martin, Statutory Construction, pp. 206 and 207, Fifth Edition, Premium Printing Press ). There being no proof that the petitioner incurred in delay, the petitioner is therefore not liable for the payment of the surcharge in question. WHEREFORE, the decision of the Court of Tax Appeals is reversed and the 25% surcharge in the amount of P326,363.94 assessed against the petitioner is set aside for not being legally due from and payable by petitioner. Without costs. SO ORDERED. Imperial and Garcia, JJ .,concur.