Lepanto Consolidated Mining Co., Inc. v. Commissioner of Internal Revenue

TWELFTH DIVISION [CA-G.R. SP No. 39381. September 27, 1999.] LEPANTO CONSOLIDATED MINING COMPANY, INC. , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE and the COURT OF TAX APPEALS , respondents . D E C I S I O N AGNIR, JR. , J p : This a petition for review under Rule 42 of the Rules of Court seeking to set aside the Decision of respondent Court of Tax Appeals dated December 05, 1995 in CTA Case Nos. 3560, 3902 and 3939, the dispositive portion of which reads as follows: LexLib "WHEREFORE, in view of the foregoing premises, the instant consolidated cases under petition for review are hereby GRANTED, with the MODIFICATION that the 25% partial refund of specific taxes paid on the subject oil products be based on the rates prescribed under Sections 1 and 2 of R.A. No. 1435. ACCORDINGLY, respondent is hereby obliged to REFUND to the petitioner the amount of FIVE THOUSAND TWO HUNDRED TWENTY-FIVE PESOS AND 6/100 (P5,225.06) in compliance with the aforesaid law. "SO ORDERED." The following antecedent facts are undisputed: Petitioner is a corporation organized and existing under the laws of the Republic of the Philippines. It is a duly licensed mining firm with a Mining License Agreement entered into with the Ministry of Natural Resources (now Department of Environment and Natural Resources). From August 1980 to January 1984, petitioner purchased from various oil companies refined and manufactured mineral oils, motor fuels and diesel fuel oils which it used actually and exclusively in connection with the exploitation and operation of its mining lease and/or claims. The prices of the said oil products included the applicable and prevailing amount of specific taxes imposed under the National Internal Revenue Code of 1977, as amended which the oil suppliers passed on to the user, petitioner in this case. Relying on the provisions of Section 5 of R.A. 1435 which allows a 25% partial refund of the specific taxes paid on the oil products enumerated under Sections 1 and 2 thereof, and on the en banc decision of the Supreme Court in Insular Lumber Co . , vs . Court of Tax Appeals, 104 SCRA 710 (1981), petitioner filed several claims for refund with the Commissioner of Internal Revenue, as follows: On November 09, 1982, a claim for refund (Annex "B", rollo p. 134) covering the period January 1979 to June 1982 in the amount of Three Million One Hundred Ten Thousand One Hundred Seventy Two Pesos and Six Centavos (Php3,110,172.06), representing twenty-five (25%) percent of the specific taxes paid for said period. Pending CIR action, to toll the prescriptive period, petitioner filed with the Court of Tax Appeals on December 22, 1982 a petition for review docketed as CTA Case No. 3560. On February 01, 1985, another claim for refund (Annex "D", rollo, p. 158) covering the period June 1983 to January 1984 in the amount of One Million Three Hundred Fifty Seven Thousand Seventy Eight Pesos and Nine Centavos (Php1,357,078.09), which upon recomputation should only be Sixty Six Thousand One Pesos and Sixty Nine Centavos (Php66,001.69), representing twenty five (25%) percent of the specific taxes paid. Pending CIR action, to toll the prescriptive period, petitioner filed with the Court of Tax Appeals on May 22, 1985 a petition for review docketed as CTA Case No. 3939. prLL On February 18, 1985, a third claim for refund (Annex "F", rollo, p. 175) covering the period from May, 1982 to June, 1983 in the amount of Two Million Twenty One Thousand Four Hundred Fifty Three Pesos and Thirty Seven Centavos (Php2,021,453.37) representing twenty-five (25%) percent of the specific taxes paid for said period. Pending CIR action, to toll the prescriptive period, petitioner filed with the Court of Tax Appeals on February 27, 1985 a petition for review docketed as CTA Case No. 3902. While the afore-mentioned petitions for review were pending before the Court of Tax Appeals, the then Acting Commissioner of Internal Revenue rendered his decisions on petitioner's separate claims for tax refund by denying the same, ruling in effect that the refund will arise only after the enactment of the required city/municipal ordinance levying the additional tax and subsequent payment thereof. On December 05, 1995, the Court of Tax Appeals (CTA) rendered its decision granting petitioner's claims for refund, but only to the extent of Five Thousand Two Hundred Twenty-Five Pesos and Six Centavos (Php5,225.06). Respondent CTA held that the twenty-five (25%) percent partial refund of the Specific taxes paid on the oil products used by petitioner in connection with the exploitation and operation of its mining lease and/or claims should be computed based on the rates prescribed under Sections 1 and 2 of R.A. 1435 and not those under Sections 153 and 156 of the National Internal Revenue Code. Hence, this petition for review. In this appeal, petitioner raised the following arguments: I THE COMPUTATION OF THE TAX REFUND BASED ON SECTIONS 1 AND 2 OF R.A. NO. 1435 RATHER THAN SECTIONS 153 AND 156 OF THE NATIONAL INTERNAL REVENUE CODE IS CONTRARY TO LAW AND EXISTING JURISPRUDENCE, PARTICULARLY THE DECISION OF THE SUPREME COURT IN THE CASE OF INSULAR LUMBER CO . , VS . COURT OF TAX APPEALS WHICH GRANTED THE CLAIM FOR PARTIAL REFUND OF SPECIFIC TAXES PAID BY THE CLAIMANT WITHOUT QUALIFICATION OR LIMITATION. II 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. NO. 1435 WHEN THE CONSTRUCTION OF SAID LAW IS NOT NECESSARY. IV SECTIONS 1 AND 2 OF R.A. NO. 1435 ARE NOT THE OPERATIVE PROVISIONS TO BE APPLIED BUT RATHER, SECTIONS 153 AND 156 OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED. V TO RULE THAT THE BASIS FOR COMPUTATION OF THE REFUNDED TAXES SHOULD BE SECTIONS 1 AND 2 OF R.A. NO. 1435 RATHER THAN SECTIONS 153 AND 156 OF THE NATIONAL INTERNAL REVENUE CODE IS UNFAIR, ERRONEOUS, ARBITRARY, INEQUITABLE AND OPPRESSIVE. VI PETITIONER'S CLAIM FOR REFUND OF TAX PAYMENTS MADE IN MAY AND JUNE 1982 HAS NOT PRESCRIBED. Petitioner submits that the computation of the tax refund should be based on the increased rates imposed under Sections 153 and 156 of the 1977 National Internal Revenue Code; that the conclusion of respondent CTA is contrary to the decision of the Supreme Court en banc in Insular Lumber Co . , vs . CTA (Ibid) as affirmed in CIR vs . Atlas Consolidated Mining and Development Corporation (G.R. No. 93631, 12 November 1990), the first Atlas case; that the CIR vs . Rio Tuba Nickel Mining Corporation case (202 SCRA 137; 207 SCRA 549 Resolution modifying the earlier decision) which was decided by a division of the Supreme Court did not effectively modify the Insular Lumber Co . case, an en banc decision, as well as the first Atlas case, in view of the Constitutional provision that "no doctrine or principle of law laid down by the Supreme Court in a decision rendered en banc or in a division may be modified or reversed except by the Court sitting en banc (Section 4 (3), Art. VIII of the Constitution). Petitioner likewise postulates that Section 5 of R.A. No. 1435 is simple, plain and clear and that no qualification or interpretation by the respondent CTA or by the Supreme Court is necessary to give effect thereto; that the express mention of Section 1 of R.A. No. 1435 in Section 5 thereof cannot be expanded to include a limitation on the tax rates to be applied, otherwise, Section 5 should very well have been included in Section 1 of R.A. No. 1435; and that the computation of the refunded taxes by the respondent CTA is unfair, erroneous, arbitrary, inequitable and oppressive. LLphil The issues raised before this Court may thus be summarized as follows: 1) Whether or not respondent CTA erred in basing the tax refund under Sections 1 and 2 of R.A. No. 1435, rather than the increased rates imposed by Sections 153 and 156 of the 1977 National Internal Revenue Code; and 2) Whether or not petitioner's claim for refund of the payments made in May and June of 1982 has already prescribed. The petition is without merit. At the outset, it must be stressed that the fundamental issue involved in the instant case has already been settled in several cases where the Supreme Court repeatedly held that the tax refund under R.A. 1435 is computed on the basis of the specific tax deemed paid under Sections 1 and 2, and not on the increased rates actually paid under the 1977 National Internal Revenue Code ( CIR vs . Rio Tuba Nickel Mining Corporation, 202 SCRA 137, 207 SCRA 549 Resolution modifying the earlier decision; CIR vs . CA and Atlas Consolidated Mining and Development Corporation , 232 SCRA 321; en banc's ruling in Davao Gulf Lumber Corporation vs . CIR and CA , 293 SCRA 76; Atlas Consolidated Mining and Development Corporation vs . CIR, et al ., G.R. No. 119786, September 22, 1998; and the consolidated cases of CIR vs . CA and CDCP Mining Corporation and Sirawai Plywood and Lumber Co . , Inc . vs . CA and CIR , G.R. Nos. 122161 and 120991, February 01, 1999). In fact, except on the issue of prescription, the factual and legal issues raised in the instant case were the very same issues settled in the case of Davao Gulf Lumber Corp . , vs . CIR and CA (supra) reiterated in the recent case of Philex Mining Corporation vs . CIR and the Court of Appeals (G.R. No. 120324, April 21, 1999). In Davao Gulf , the Supreme Court en banc ruled: ". . . Since the partial refund authorized under Section 5, R.A. No. 1435, is in the nature of a tax exemption, it must be construed strictissimi juris against the grantee. Hence, petitioner's claim for refund on the basis of the specific taxes it actually paid must expressly be granted in a statute stated in a language too clear to be mistaken. "We have carefully scrutinized R.A. No. 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 of 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 R.A. No. 1435 may be based on higher rates which were non-existent at the time of its enactment, this Court cannot presume otherwise. A legislative lacuna cannot be filled by judicial fiat." In another case involving the same issue ( CIR vs . Rio Tuba Nickel Mining Corporation , supra) the Supreme Court said: "Since the private respondent's claim for refund covers specific taxes paid from 1980 to July 1983 then we find that the private respondent is entitled to a refund. It should be made clear, however, that Rio Tuba is not entitled to the whole amount it claims as refund. "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 . " . . . Since the grant of refund privileges 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 . " In resolving the main issue presented in the instant petition, We are guided by and constrained to follow what the highest tribunal has already settled, pursuant to the doctrine of stare decisis et non quieta movere . In the Davao Gulf case, the Supreme Court also ruled that the Insular Lumber Co. case and the first Atlas case are not inconsistent with the Rio Tuba case and the second Atlas case. Thus, the Court ruled: "Neither Insular Lumber Co . nor the first Atlas case ruled on the issue of whether the refund privilege under Section 5 should be computed based on the specific tax deemed paid under Sections 1 and 2 of R.A. No. 1435, regardless of what was actually paid under the increased rates. Rio Tuba and the second Atlas case did. " Insular Lumber Co . decided a claim for refund on specific tax paid on petroleum products purchased in the year 1963, when the increased rates under the NIRC of 1977 were not yet in effect. Thus, the issue now before us did not exist at the time, since the applicable rates were still those prescribed under Sections 1 and 2 of R.A. No. 1435. "On the other hand, the issue raised in the first Atlas case was whether the claimant was entitled to the refund under Section 5, notwithstanding its failure to pay any additional tax under a municipal or city ordinance. Although Atlas purchased petroleum products in the years 1976 to 1978 when the rates had already been changed, the Court did not decide or make any pronouncement on the issue in that case. prcd "Clearly, it is impossible for these two decisions to clash with our pronouncement in Rio Tuba and second Atlas case, in which we ruled that the refund granted be computed on the basis of the amounts deemed paid under Sections 1 and 2 of R.A. No. 1435. In this light, we find no basis for petitioner's invocation of the constitutional proscription 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 ." Going over the second issue petitioner asserts that respondent CTA erred in holding that its claim for refund of the payments made in May and June of 1982. We disagree. It must be stressed that what the CTA ruled is that the computation of the refund for the months of May and June 1982 and the month of June 1983 were disregarded due to overlapping. As correctly pointed out by the CTA: "CTA Case No. 3560 which covers up to June, 1982 overlaps with CTA Case No. 3902 which starts from May, 1982. On the other hand, the latter case which extends up to June, 1983 spreads over to CTA Case No. 3939 which begins from same date of June, 1983," The afore-mentioned periods were properly disregarded by respondent CTA in the claim wherein said periods were already covered, otherwise, the Government would be refunding twice to petitioner for the said periods which were already covered in another claim. Finally, We deny petitioner's prayer for the payment of interest and attorney's fees. In Atlas Fertilizer Corp . , vs . CIR, (100 SCRA 556) it was ruled that: ". . . the well settled rule is that in the absence of statutory provision clearly or expressly directing or authorizing payment of interest on the amount to be refunded to taxpayer, the Government cannot be required to pay interest. Likewise, it is the rule that interest may be awarded only when the collection of tax sought to be refunded was attended with arbitrariness." Finding the above-mentioned exceptions absent in the instant tax case, petitioner is not entitled to payment of interest. prLL WHEREFORE, foregoing premises considered, the petition is DENIED DUE COURSE and accordingly DISMISSED. The assailed decision is hereby AFFIRMED. SO ORDERED. Mabutas, Jr . and Aquino, JJ ., concur.