Commissioner of Internal Revenue v. Court of Tax Appeals

THIRD DIVISION [G.R. No. 93631. November 12, 1990.] COMMISSIONER OF INTERNAL REVENUE , petitioner , vs . ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATION, ET AL. , respondents . NOTICE Gentlemen: Quoted hereunder, for your information, is a resolution of the Third Division of this Court dated November 12, 1990 : The issue in this case is whether or not Atlas Consolidated Mining and Development Corporation (hereinafter referred to as Atlas) is entitled to the refund, authorized under Section 5 of Republic Act No. 1435, of 25% of the specific tax paid by it on gasoline and diesel fuel used for mining, even though Atlas has not paid any additional tax under a municipal or city ordinance. The facts show that in the years 1976 to 1978 Atlas purchased from Petrophil Corporation extra gasoline and diesel fuel on which specific taxes due thereon were collected and paid. These purchases were used in its mining operations in Toledo City and subsequently, Atlas filed a claim for refund invoking the benefit granted under RA 1435. The Commissioner of Internal Revenue rejected Atlas' claim. Upon appeal by Atlas, the Court of Tax Appeals (CTA) held that Atlas is entitled to the refund. The Court of Appeals affirmed the CTA decision, hence this petition. After a careful review of the petition and its annexes, this Court finds no reversible error committed by the two courts below. RA 1435, which is an Act providing means for increasing the Highway Special Fund, increased the specific taxes on manufactured oil and other fuels collected by the national government (Sec. 1). The specific tax collected by the national government accrues to the Highway Special Fund set up under RA 917. The Act also authorizes local governments to collect an additional tax of not more than 25% of the specific tax imposed by the national government (Sec. 4). The petitioner invokes Sections 4 and 5 of the Act, which provides: SECTION 4. Municipal Boards or councils may, notwithstanding the provisions of sections one hundred and forty-two and one hundred and forty-five of the National Internal Revenue Code, as hereinabove amended, levy an additional tax of not exceeding twenty-five per cent of the rates fixed in said sections, on manufactured oils sold or distributed within the limits of the city or municipality; Provided, That Municipal taxes heretofore levied by cities through city ordinances on gasoline, airplane fuel, lubricating oil and other fuels, are hereby ratified and declared valid. The method of collecting said additional tax shall be prescribed by the municipal board or council concerned. SECTION 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 . . . ." ( Rollo , p. 15) The petitioner argues that the 25% tax refund under Section 5 operates only when by virtue of Section 4, a municipal or city ordinance imposes an additional tax not exceeding 25% of that imposed by the national government. It claims that where, as in this case, there is no ordinance imposing an additional tax, no refund could be claimed by Atlas. A mining or lumber concessionaires such as Atlas, the petitioner contends, is entitled to refund only of the additional tax imposed by the local political unit, not of the basic tax imposed by the national government. The petitioner's stand cannot be sustained. A reading of the legislative proceedings leading to the enactment of RA 1435 shows that mining 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. RA 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 follows that the refund refers to a refund of the specific tax to the national government, not the specific tax to the local government. The petitioner insists that the privilege of refund granted by Section 5 of RA 1435, which was enacted on June 14, 1956, no longer subsists, as evidenced by subsequent legislation increasing the rate of specific tax. There is no merit in this argument. As aptly stated by the Court of Appeals, the purpose for the increase in the rate of the tax cannot in anyway negate the policy behind the grant of partial refund. The Court sees no inconsistency between the increase in specific tax rates and the retention of the refund privilege. In fact, with the increased specific tax rates the grant of partial refund to mining and lumber concessionaires is made more imperative considering that they seldom use the highways, the construction of which are financed by specific taxes. Lastly, the petitioner argues that since in Section 3 of RA 1435, the increased specific taxes accrue to the Highway Special Fund, then the refund privilege in Section 5 was repealed with the issuance of Presidential Decree No. 711 which abolished all special and fiduciary funds. The court does not agree. The petitioner has failed to show that the legislative intent to repeal Section 5 of RA 1435 is clear and manifest. As a rule, repeals by implication are disfavored, unless the conflict between the former law and a subsequent one is so patent and irreconcilable as to leave no doubt that the purpose of the legislature was to repeal or amend the former law. CONSIDERING THE FOREGOING, the COURT RESOLVED to DENY the petition for failure to show that the findings of the Court of Tax Appeals and Court of Appeals are not based on substantial evidence or that the conclusions are contrary to applicable law and jurisprudence. Very truly yours, JULIETA Y. CARREON Clerk of Court By: ALFREDO P. MARASIGAN, JR. Asst. Div. Clerk of Court