Atlas Consolidated Mining & Development Corp. v. Commissioner of Internal Revenue

SPECIAL SEVENTH DIVISION [CA-G.R. SP No. 36183. September 22, 2000.] ATLAS CONSOLIDATED MINING & DEVELOPMENT CORPORATION , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALS , respondent . D E C I S I O N GUERRERO , J p : Before Us is a petition for review from the decision of the Court of tax Appeals, dated 14 December 1994, granting petitioner Atlas Consolidated Mining & Development Corporation's (hereafter, "Atlas") claim for refund but reducing it to the amount of P33,824.69 pursuant to Republic Act No. 1435. The pertinent facts: Atlas is a duly organized mining corporation which it operates a copper mining business in Toledo City, Cebu. 1 From 05 July 1983 to 27 May 1985, Atlas purchased manufactured fuel oil, namely: aviation gas, extra gasoline, oil and lubricants, aviation turbo, and diesel from Petrophil Corp. (hereafter, Petrophil) 2 and used such fuel in the operation of its mining concessions. 3 Petrophil paid the specific taxes due on the fuel sold to Atlas under Sections 153 and 156 (formerly Sections 142 and 145) of the National Internal Revenue Code (NIRC) of 1977 and passed them on to Atlas during the sale. 4 On 28 August 1985, Atlas filed a claim for refund with Acting Commissioner of Internal Revenue Ruben B. Ancheta of the amount of P11,927,236.92, which represents 25% of the total specific taxes paid on the fuel purchased from Petrophil during the subject period. The claim for refund was based on Section 5 in relation to Section 1 of RA 1435, entitled an "Act To Provide Means For Increasing The Highway Special Fund." 5 Sec. 5 provides, thus: "SEC. 5. The proceeds of the additional tax on manufactured oils shall accrue to the road and bridge funds of the political subdivision for whose benefit the tax is collected: Provided, however, That whenever 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 be refunded by the Collector of Internal Revenue upon submission of proof of actual use of oils and under similar conditions enumerated 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 construed unless the routes or location thereof shall have been approved by the Commissioner of Public Highways after a determination that such road can be made part of an integral and articulated route in the Philippine Highway System, as required in section twenty-six of the Philippine Highway Act of 1953." Atlas complied with the requisites for a refund. 6 On the same day, Atlas filed a petition for review with the Court of Tax Appeals (CTA) to avoid prescription of the claim. 7 The CTA granted the refund, in this wise: "In view of the foregoing rulings laid down by the Supreme Court, the only thing left for us to do is to determine the amount of tax credit which petitioner is entitled to based [sic] on Sections 1 and 2 of R.A. No. 1435. However, the amount of tax credit shall be limited 25% of the specific taxes paid by petitioner from August 28, 1983 because prior to said date the claim for tax credit had prescribed. "After evaluating the documentary evidence presented by petitioner, the Court arrived at the following computation on the amount of specific taxes creditable in favor of petitioner (See Annex 'A'). COMPUTATION OF THE 25% SPECIFIC TAX REFUNDABLE PURSUANT TO SECTION 5 IN RELATION WITH SECTIONS 1 AND 2 OF R.A. NO. 1435 Manufactured Quantity Tax Rate Specific Oils Tax Aviation Gas 144,660L P0.08/L P11,572.80 Extra Gasoline 1,341,987L 0.08/L 107,358.96 Oils and Lubricants 18,000L 0.07/L 1,260.00 Aviation Turbo 18,000L 0.08/L 1,440.00 Diesel 13,667MT 1.00/MT 13,667.00 Total Specific Taxes paid under P135,298.76 Secs. 1 & 2 of R.A. No. 1435 Refundable Tax Rate under Sec. 5 of R.A No. 1435 x 25% AMOUNT P33,824.69 REFUNDABLE "WHEREFORE, the petition for review is hereby GRANTED . Respondent is hereby ordered to refund in favor of petitioner the amount of P33,824.69, representing 25% specific taxes paid on locally purchased manufactured fuels, oils and diesel pursuant to the provision of Section 5 of Republic Act No. 1435. No costs of suit. "SO ORDERED." 8 On 06 February 1995, Atlas filed the instant petition before Us based on the following grounds: "I FAILING TO APPLY THE SUPREME COURT'S EN BANC DECISION IN INSULAR LUMBER CO. VS. CTA AND INSTEAD MADE AS BASIS FOR ITS DECISION THE SUPREME COURT'S DECISION SITTING IN A DIVISION IN THE RIO TUBA CASE. "II FAILING TO APPLY THE INCREASE IN RATES IMPOSED BY SUCCEEDING AMENDATORY LAWS, UNDER WHICH THE PETITIONER PAID THE SPECIFIC TAXES ON MANUFACTURED OILS AND OTHER FUELS. "III UNNECESSARILY INTERPRETING SECTION 5 OF REPUBLIC ACT NO. 1435 CONTRARY TO ESTABLISHED LEGAL PRINCIPLES. "IV FAILING TO APPLY SECTIONS 142 AND 145 OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, MAKING THE QUESTIONED DECISION UNFAIR, ERRONEOUS, ARBITRARY, INEQUITABLE AND OPPRESSIVE. "V COMPUTING THE AMOUNT REFUNDABLE WHEN IT EXCLUDED QUANTITIES OF MANUFACTURED OILS AND FUELS/DIESEL PURCHASED BY PETITIONER IN 1984 AND 1985." 9 We deny the petition. The Issues are not novel. The Supreme Court En Banc unanimously ruled on the same issues in the case of Davao Gulf Lumber Corp. v. Commissioner of Internal Revenue 10 and reiterated such ruling in the case of Atlas Consolidated Mining and Development Corp. v. Commissioner of Internal Revenue. 11 Even the factual antecedents of the aforesaid cases are essentially similar to the instant case. The core issue in the instant case, as well as in the aforesaid cases, is whether the 25% refund due under RA 1435 should be based on the amount of specific taxes deemed paid under Sections 1 and 2 of RA 1435 or on the amount of increased specific taxes actually paid by the claimant under Sections 153 and 156 of the 1977 NIRC, which was in effect at the time of the subject transactions. Sections 1 and 2 of R.A. No. 1435 provide: "SECTION 1. Section one hundred and forty-two of the National Internal Revenue Code, as amended, is further amended to read as follows: 'SEC. 142. Specific Tax on manufactured oils and other fuels . On refined and manufacture mineral oils and motor fuels, there shall be collected the following taxes: (a) Kerosene or petroleum, per liter of volume capacity, two and one-half centavos; (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) On denatured alcohol to be used for motive power, per liter of volume capacity, one centavo: Provided, That if the denature alcohol is mixed with gasoline, the specific tax on which has already been paid, only the alcohol content shall be subject to the tax herein prescribed. For the purpose of this subsection, the removal of denatured alcohol of not less than one hundred eighty degrees proof (ninety per centum absolute alcohol) shall be deemed to have been removed for motive power, unless shown to the contrary. . . . "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 Tax on Diesel 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." Sections 153 and 156 of the 1977 NIRC, on the other hand read, thus: "Sec. 153. Specific tax on manufactured oils and other fuels . On refined and manufactured mineral oils and motor fuels, there shall be collected the following taxes which shall attach to the articles hereunder enumerated as soon as they are in existence as such: (a) Kerosene, per liter of volume capacity, seven centavos; (b) Lubricating oils, per liter of volume capacity, eighty centavos; (c) Naptha, gasoline and all other similar products of distillation, per liter of volume capacity, ninety-one centavos; provided, That on premium and aviation gasoline the tax shall be one peso per liter of volume capacity; (d) On denatured alcohol to be used for motive power, per liter of volume capacity, one centavo; Provided, That unless otherwise provided for by special laws, if the denatured alcohol is mixed with gasoline, the specific tax on which has already been paid, only the alcohol content shall be subject to the tax herein prescribed. For the purposes of this subsection, the removal of denatured alcohol of not less than one hundred eighty degrees proof (ninety per centum absolute alcohol) shall be deemed to have been removed for motive power, unless shown to the contrary. (e) Process gas, per liter of volume capacity, three centavos; (f) Thinners and solvents, per liter of volume capacity, fifty-seven centavos; (g) Liquefied petroleum gas, per kilogram, fourteen centavos; Provided, That liquefied petroleum gas used for motive power shall be taxed at the equivalent rate as the specific tax on diesel fuel oil; (h) Asphalts, per kilogram, eighty centavos; (i) Greases, waxes and petrolatum, per kilogram, fifty centavos, (j) Aviation turbo jet fuel, per liter of volume capacity, fifty-five centavos. (As amended by P.D. 1672) Note: Section 153 (c) of B.P. 41, Sept. 7, 1979, Provides: 'Sec. 153 (c). Naptha, per liter of volume capacity, fifty centavos' gasoline and all other similar products of distillation, per liter of volume capacity. sixty-two centavos. Provided, That on premium and aviation gasoline the tax shall be sixty-seven centavos and fifty-five centavos respectively per liter of volume capacity." "SEC. 156. Specific tax on diesel fuel oil . On fuel oil, commercially known as bunker fuel oil, and on similar fuel oils, having more or less the same generating power, there shall be collected, per liter of volume capacity, seventeen and one-half centavos, which tax shall attach to this fuel as soon as it is in existence as such." With the difference between the amount of taxes actually paid by Atlas and the amount deemed paid by it under R.A. 1435, which is the basis of the amount refunded by the CTA, it is understandable why Atlas insists otherwise. However, We are bound by the precedents established by the Supreme Court 12 and are left with no alternative but to decide the instant case in like manner. The high court's rationale in the Davao Gulf Lumber case is as persuasive as it is logically sound, it reads thus: "A tax cannot be imposed unless it is supported by the clear and express language of a statute (Commissioner of Internal Revenue vs. The Court of Appeals, the Court of Tax Appeals and Ateneo de Manila University, G.R. No. 115349, April 18, 1997, p. 8); on the other hand, once the tax is unquestionably imposed, '[a] claim of exemption from tax payments must be clearly shown and based on language in the law too plain to be mistaken (Mactan Cebu International Airport Authority vs. Marcos, 261 SCRA 667, 680, September 11, 1996, per Davide, Jr., J. See also wonder Mechanical Engineering Corporation vs. Court of Tax Appeals, 64 SCRA 555, 563, June 30, 1975; cited in Vitug, Compendium of Tax Law and Jurisprudence, pp. 28-29, 2nd rev. ed. [1989]. Since the partial refund authorized under Section 5, RA 1435, is in the nature of a tax exemption (Insular Lumber Co. vs. Court of Appeals, supra, p. 719), it must be construed strictissimi juris against the grantee. Hence, petitioner's claim of refund on the basis of the specific taxes it actually paid must expressly be granted in a statute in a language too clear to be mistaken. ACIESH "We have carefully scrutinized RA 1435 and the subsequent pertinent statutes and found no expression of a legislative will authorizing a refund based on the higher rates claimed by petitioner. The mere fact that the privilege refund was included in Section 5, and not in Section 1, is insufficient to support petitioner's claim. When the law itself does not explicitly provide that a refund under RA 1435 may be based on higher rates which were nonexistent at the time of its enactment, this Court cannot presume otherwise. A legislative lacuna cannot be filled by judicial fiat (See Paper Industries Corp. of the Phil. vs. CA, 250 SCRA 434, 455, December 1, 1995)." 13 Petitioner imputes error on the CTA for relying on the case of Commissioner of Internal Revenue v. Rio Tuba Nickel Mining Corp. 14 which was decided by a division, instead of using the authority of Insular Lumber Co. v. CTA, which was decided by the court en banc . Such contention has been recycled from the aforecited cases Davao Gulf Lumber 15 and Atlas Consolidated Mining 16 and is patently misleading. The Insular Lumber case did not rule on the issue of whether a claim for refund under R.A. 1435 should be based on the amount deemed paid under Sections 1 and 2 of said law or on the amount actually paid under Sections 153 and 156 for the simple reason that said case resolved a claim for refund on petroleum products purchased in 1963 or at a time when the increased rates under Sections 153 and 156 were not yet in effect. Even if petitioner is adamant in its distorted construction of the Insular Lumber case, it should have relented in view of the promulgation of the Davao Gulf Lumber case, which was decided en banc . WHEREFORE, in view of the foregoing, the instant petition is hereby DENIED and the decision of the Court of tax Appeals dated 14 December 1994 is AFFIRMED in toto . Costs against petitioner. SO ORDERED. * Sabio, Jr. and ** De los Santos, JJ., concur. Footnotes * Acting Senior Member. ** Vice J. Demetrio G. Demetrio, now on leave. 1. Rollo , p. 6. 2. Exhibits "I" to "K". 3. Rollo , p. 3. 4. Exhibit "H." 5. Exhibit "A." 6. Exhibits "B" and "C." 7. Records, pp. 1-3. 8. Rollo , pp. 38-39. 9. Rollo , pp. 12-13. 10. 293 SCRA 76 [1998]. 11. 295 SCRA 721 [1998.] 12. Commissioner of Internal Revenue v. Rio Tuba Nickel Mining Corp., 202 SCRA 137 [1991] and 207 SCRA 549 [1992]; Commissioner of Internal Revenue v. Court of Appeals, 232 SCRA 321 [1994]; Davao Gulf Lumber Corp. v. CIR, 293 SCRA 76 [1998]; Atlas Consolidated Mining & Development Corp. v. CIR, 295 SCRA 721 [1998]. 13. 293 SCRA 76 at 88. 14. 202 SCRA 137 [1991] and 207 SCRA 549 [1992]. 15. 293 SCRA 76 [1998]. 16. 295 SCRA 721 [1998].