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    CIR v. CA and CDCP Mining Corp

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    Eva Trinidad
    The Supreme Court ruled that the amount to be refunded for specific taxes paid on fuels used by mining and forest concessionaires must be based on the tax rates under the 1939 Tax Code as amended by R.A. 1435, not the higher rates under the 1977 Tax Code. Section 5 of R.A. 1435 allows a 25% refund of the "specific tax paid" and does not authorize refunds based on later, increased tax rates. The nature of the tax exemption under Section 5 requires it to be interpreted strictly against the grantee.

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    CIR v. CA and CDCP Mining Corp

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    Eva Trinidad
    115 views3 pages
    The Supreme Court ruled that the amount to be refunded for specific taxes paid on fuels used by mining and forest concessionaires must be based on the tax rates under the 1939 Tax Code as amended by R.A. 1435, not the higher rates under the 1977 Tax Code. Section 5 of R.A. 1435 allows a 25% refund of the "specific tax paid" and does not authorize refunds based on later, increased tax rates. The nature of the tax exemption under Section 5 requires it to be interpreted strictly against the grantee.

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    The Supreme Court ruled that the amount to be refunded for specific taxes paid on fuels used by mining and forest concessionaires must be based on the tax rates under the 1939 Tax Code as amended by R.A. 1435, not the higher rates under the 1977 Tax Code. Section 5 of R.A. 1435 allows a 25% refund of the "specific tax paid" and does not authorize refunds based on later, increased tax rates. The nature of the tax exemption under Section 5 requires it to be interpreted strictly against the grantee.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    115 views3 pages

    CIR v. CA and CDCP Mining Corp

    Uploaded by

    Eva Trinidad
    The Supreme Court ruled that the amount to be refunded for specific taxes paid on fuels used by mining and forest concessionaires must be based on the tax rates under the 1939 Tax Code as amended by R.A. 1435, not the higher rates under the 1977 Tax Code. Section 5 of R.A. 1435 allows a 25% refund of the "specific tax paid" and does not authorize refunds based on later, increased tax rates. The nature of the tax exemption under Section 5 requires it to be interpreted strictly against the grantee.

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    of 3

    CIR v.

    CA
    Martinez, J. | 1999
    Digested by: eamt

    DOCTRINE: A partial refund under Section 5, R.A. 1435 is in the nature of a tax exemption, and
    therefore, must be construed strictissimi juris against the grantee.

    FACTS:
    - Two consolidated cases with the same facts
    - CASE 1: CIR v. CA and CDCP Mining Corp
    - July 1, 1980 to June 30, 1982 – PR bought from Mobil and Caltex quantities of manufactured
    mineral oil, motor fuel, diesel and fuel oil, which PR used exclusively in the expoitation (sic) and
    operation of its mining concession
    - September 6, 1982 – PR filed with CIR a claim for refund in the amount of P9,962,299.71,
    representing 25% of the specific taxes collected on refined and manufactured mineral oil, motor
    fuel and diesel fuel that PR utilized in its operations as mining concessionaire, totalling (sic)
    P39,849,198,47
    - October 8, 1982 – CIR didn’t take immediate action, so to toll the prescriptive period, PR filed
    with CTA a petition for review of the presumed denial of the CIR of the claim
    - January 2, 1984 – CIR actually denied PR’s claim
    - Aug 9, 1994 – CTA granted PR’s claim for refund only in the amount of P38,461.86, without
    interest
    o Said that PR is entitled to a refund of the specific taxes that it paid during the period of
    September 23, 190 to June 30, 1982, prior which the claim had prescribed, but that the
    rates specified under Secs. 1 and 2. Of R.A. 1435, without interest
    - PR filed a petition for review with the CA
    - CA modified the CTA decision
    o refund to petitioner (private respondent) CDCP Mining Corporation the amount of
    P1,598,675.25, without interest, equivalent to 25% refund of specific taxes paid on its
    purchases during the period September 23, 1980 to June 30, 1982, of manufactured oil
    and other fuel and diesel fuel oil, pursuant to Section 5 of Republic Act No. 1435, in
    relation to Sections 153 and 156 of the Tax Code.
    - CASE 2: Sirawai Plywood & Lumber Co. Inc, v. CA and CIR
    - Petitioner alleges that it’s a duly licenced forest concessionare with a Timber License Agreement
    entered into with the Ministry of Natural Resources
    - 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
    - The oil companies passed on to petitioner the specific taxes imposed under Sec 153 and 156
    (formerly Secs 142 and 145) of the 1977 NIRC on refined and manufactured oils etc. that the
    company sold to petitioner
    - Nov 8, 1982 – In accordance with Insular Lumber Co. v. CTA petitioner filed with CIR a claim for
    refund of (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.
    o To support its claim, petitioner submitted the affidavits of petitioner and 4 disinterested
    persons attesting to the fact that therefined and manufactured mineral oils, etc., were
    actually used by petitioner in the exploitation and operation of its forest concession
    - December 13, 1982 – petitioner filed with CTA a petition for review to prevent the lapse of the
    two year prescriptive period
    - CTA: ordered CIR to refund only 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 Republic Act No. 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
    - CA denied

    ISSUE: Whether the amount to be refunded should be based on the rates of specific tax under the 1939
    Tax Code as amended by R.A. 1435 or should it be based on the higher rates under the 1977 Tax Code as
    amended by P.D. 1672 and E.O. 672? – 1939 Tax Code as amended by R.A. 1435

    HELD:

    - Sec. 1 and 2 of R.A. 1435 amended Sections 142 and 145 of the 1939 Tax Code by changing the
    rates of tax for certain fuel and oil products. Section 5 of said Republic Act, which reads:
    o The proceeds of the additional tax on the manufactured oils shall accrue to the road and
    bridges 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 subparagraphs
    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 constructed unless
    the routes or location thereof shall have been approved by the Commissioner of Public
    Works and 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. (emphasis supplied).
    - It allows a tax refund of "25% of the specific tax paid thereon", subject to certain conditions. In
    1977, P.D. 1158 codified all existing tax laws wherein Sections 142 and 145 of the Tax Code, as
    amended by Sections 1 and 2 of R.A. 1435 were re-numbered to Sections 153 and 156. Later,
    the latter sections were amended by P.D. 1672 and subsequently by E.O. 672 10 wherein the tax
    rates for certain oil and fuel products were further increased.
    - A partial refund under Section 5, R.A. 1435 is in the nature of a tax exemption, and therefore,
    must be construed strictissimi juris against the grantee.
    - There is nothing in Section 5 of R.A. 1435 which authorizes a tax refund based on the higher
    rates under Sections 153 and 156 of the 1977 Tax Code.
    o It should be noted that Sections 1 and 2 of R.A. 1435 simply amended Sections 142 and
    145 of the Tax Code. Section 5 was not incorporated in the Tax Code. It is no different
    when Section 1 of P.D. 1672 amended the re-numbered Section 153 of the Tax Code.
    - Davao Gulf Lumber Corp. v. CIR and CA:
    o When the law itself does not explicitly provide that a refund under RA 1435 may be
    based on higher rates which were non-existent at time of its enactment, this Court
    cannot presume otherwise, A legislative lacuna cannot be filled by judicial fiat.
    - At the risk of being tautological, nothing in Section 5 of R.A. 1435 was it provided that the rate
    of refund shall be based on the increased rates under Section 153.
    - WHEREFORE, premises considered, the petition in G.R. No. 122161 is GRANTED and the assailed
    decision of the Court of Appeals REVERSED and SET ASIDE. The Decision dated August 2, 1994 of
    Court of Tax Appeals in Case No. 3554 is REINSTATED. The petition in G.R. No. 120991 is DENIED
    and the assailed decision of the Court of Appeals is AFFIRMED in toto.

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