Sirawai Plywood and Lumber Co., Inc. v. Commissioner of Internal Revenue

SPECIAL FORMER SEVENTH DIVISION [CA.-G.R. SP No. 34986. July 10, 1995.] (CTA Case No. 3554) SIRAWAI PLYWOOD AND LUMBER CO., INC. , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE and THE COURT OF TAX APPEALS , respondents . D E C I S I O N MONTOYA , J p : This is a petition for review of the decision dated August 2, 1994 of the Court of Tax Appeals (CTA Case No. 3554) granting the claim for partial tax refund of petitioner Sirawai Plywood and Lumber Co., Inc., under the provisions of Section 5 of Republic Act No. 1435 but reducing the amount of specific taxes to be refunded by respondent Commissioner of Internal Revenue from Ninety Nine Thousand Two Hundred Twenty Six and 17/100 pesos (P99,226.17) to One Thousand One Hundred One and 15/100 Pesos (P1,101.15), without interest. The petitioner alleges that it is a duly licensed forest concessionaire with a Timber License Agreement duly entered into with the Ministry of Natural Resources; that during the period beginning July 1, 1980 to May 31, 1981, petitioner purchased from various oil companies refined and manufactured mineral oils, motor fuels and diesel fuel oils which petitioner actually and exclusively used in connection with the exploitation and operation of its forest concession; that the said oil companies paid and passed on to the petitioner the specific taxes imposed under Sections 153 and 156 (formerly Sections 142 and 145) of the 1977 NIRC on refined and manufactured mineral oils, motor fuels and diesel fuel oils that said company sold to petitioner; that in accordance with the provisions of Republic Act No. 1435 and the decision of the Supreme Court in Insular Lumber Co. vs. Court of Tax Appeals (G.R. No. L-31057, May 29, 1981), petitioner filed with the respondent Commissioner on November 8, 1982, a claim for refund in the amount of Ninety Nine Thousand Two Hundred Twenty Six and 17/100 Pesos (P99,226.17) representing twenty five percent (25%) of the specific taxes collected on the refined and manufactured mineral oils, motor fuels, and diesel fuel oils that petitioner utilized in its operations as forest concessionaire as computed. In support of the claim for refund, the petitioner submitted to respondent Commissioner the affidavits of petitioner and four disinterested persons attesting to the fact that the refined and manufactured minerals oils, motor fuels, and diesel fuel oils that the petitioner purchased from various oil companies were actually used by the petitioner in the exploitation and operation of its forest concession. On December 13, 1982, the petitioner filed with the respondent Court of Tax appeals a Petition for Review of the decision dated December 1, 1982 entitled "Sirawai Plywood and Lumber Co., Inc. vs. Commissioner of Internal Revenue", docketed as CTA Case No. 3554 to prevent the lapse of the two (2) years prescriptive period. On August 2, 1994, the respondent Court of Tax appeals rendered the questioned decision now subject of this appeal, the dispositive portion of which follows: "WHEREFORE, in all the foregoing, Respondent Commissioner of Internal Revenue is hereby ORDERED to REFUND the sum of P1,101.15 in favor of the herein petitioner which is equivalent to 25% partial refund of specific taxes paid on its purchases of fuel oils and lubricants pursuant to the provision of Section 5 of RepublicActNo.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 of R.A.1435." The petitioner contends that the respondent Court of Tax Appeals has decided a question of substance not in accord with the provisions of applicable law and jurisprudence, in that the respondent Court of Tax Appeals ruled that the bases for the computation of the refund of the specific taxes paid by the petitioner on its purchases of manufactured and diesel fuel oils should be the rates specified in Sections 1 and 2 of R.A. 1435 and not the increased rates mandated by Sections 153 and 156 of the National Internal Revenue Code of 1977. In support of its contention, the petitioner argued that: " ARGUMENTS I THE RESPONDENT CTA FAILED TO APPLY THE SUPREME COURT'S DECISION IN INSULARLUMBERCO. VS. COURTOF TAX APPEALS WHICH GRANTED THE CLAIM FOR PARTIAL REFUND OF SPECIFIC TAXES PAID BY THE CLAIMANT, WITHOUT QUALIFICATION OF LIMITATION. II THE RESPONDENT CTA IGNORED THE INCREASE IN RATES IMPOSED BY SUCCEEDING AMENDATORY LAWS, UNDER WHICH THE PETITIONER PAID THE SPECIFIC TAXES ON MANUFACTURED AND DIESEL FUELS. III IN ITS DECISION, THE RESPONDENT CTA RULED CONTRARY TO ESTABLISHED TENETS OF LAW WHEN IT LENT ITSELF TO INTERPRETING SECTION 5 OF R.A.1435. WHEN THE CONSTRUCTION OF SAID LAW IS NOT NECESSARY. IV SECTIONS 1 AND 2 OF R.A.1435 ARE NOT THE OPERATIVE PROVISIONS TO BE APPLIED BUT RATHER. SECTIONS 142 AND 145 OF THE NATIONALINTERNALREVENUECODE. AS AMENDED. V TO RULE THAT THE BASES FOR COMPUTATION OF THE REFUNDED TAXES SHOULD BE SECTIONS 1 AND 2 OF R.A.1435 RATHER THAN SECTIONS 153 AND 156 OF THE NATIONALINTERNALREVENUECODE IS UNFAIR, ERRONEOUS. ARBITRARY. INEQUITABLE AND OPPRESSIVE." The petitioner submits THAT the decision of the Supreme Court in Commissioner of Internal Revenue vs. Rio Tuba Nickel Mining Corporation, 202 SCRA 137, which was decided by a division, did not effectively modify the earlier rulings of the same Court in the manner provided by Section 4 (3). Art. VIII of the Constitution which provides: "(3) Cases or matters heard by a division shall be decided or resolved with the concurrence of a majority of the members who actually took part in the deliberations on the issues in the case and voted thereon, and in no case, without the concurrence of at least three of such members. When the required number is not obtained, the case shall be decided en banc: provided, that no doctrine or principle of law laid down by the court in a decision rendered en banc or in division may be modified or reversed except by the court sitting en banc ." (Emphasis supplied) According to the petitioner, the ruling enunciated by the Supreme Court in the Insular and Atlas cases is still the controlling doctrine, and the same should have been applied by the respondent court: that the ruling in Insular and Atlas , the effect that partial refund should be based on actual specific taxes paid, is the better view; and that the same is logical, consistent, and expressive of legislative intent. The legislative history of R.A. 1435 would show that the rationale for granting a partial tax refund to miners and forest concessionaires existed up to and until the time the High Special Fund was abolished in 1985. Hence, the amounts actually paid by petitioner as specific taxes, all of which accrued to the Fund, should be the basis for the amount of the refund provided under Section 5 of R.A. 1435. The petitioner further argued that in the earlier case of Insular Lumber Co. vs. Court of Tax appeals, 104 SCRA 710. the Supreme Court affirmed the ruling of the Court of Tax Appeals granting a partial refund of specific taxes paid by the claimant. without qualification or limitation. This decision of the Court en banc was affirmed in Commissioner of Internal Revenue vs. Atlas Consolidated Mining and Development Corporation (G.R. No. 93631, November 12, 1990). In the latter case the claimant Atlas Consolidated Mining and Development Corporation purchased gasoline and diesel fuel for its mining operations in the years 1976 to 1978 and was claiming a refund of 25% of the specific tax paid by it on these fuel oils. That, however, P.D. No. 1122 had already amended Sections 142 and 145 of the NIRC and had increased the rates of the taxes to be paid. Yet the Supreme Court affirmed the findings of both the Court of Tax Appeals and the Court of Appeals that Atlas was entitled to a refund of 25% of the specific taxes paid by it. The main issue in this case is whether the original rates mandated under Sections 1 and 2 of R.A. No. 1435 should be used in computing the tax refunds. We find petitioner's contention not well-taken. In the recent case of Commissioner of Internal Revenue vs. Hon. Court of Appeals and Atlas Consolidated Mining and Development Corporation, G.R. No. 106913. May 10, 1994, 232 SCRA 321, the Supreme Court held that the claim for refund of specific taxes paid should be granted based on the dates specified by Sections 1 and 2 of R.A. No. 1435 and not on the increased rates under Sections 153 and 156 of the Tax Code of 1977 provided the claims are not barred by prescription. Sections 153 and 156 of the National Internal Revenue Code never contemplated a refund. If at all, they only provided for the new specific tax rates. Consequently, Section 5 of R.A. 1435 subsisted until 1985. The grant of refund privileges must be strictly construed against the tax payer and liberally in favor of the taxing authority. Although the rule is not absolute, it must, however, be upheld in the case at bar in the absence of a law to the contrary. Neither can we speculate that Secs. 153 and 156 of the National Internal Revenue Code repealed Sec. 5 of R.A. 1435 in the absence of an express provision to this effect. Had it been the desire of the legislative body to use the new rates provided under the aforecited sections in computing the refunds, it would have done so in clear and categorical terms. For the present, we cannot question the wisdom of the law because such is the province of the legislature. WHEREFORE, premises considered, the petition for review is hereby DENTED for lack of merit, without pronouncement as to costs. SO ORDERED. Gutierrez and Salas , JJ ., concur.