GR 132155; (August, 2001) (Digest)
G.R. No. 132155 ; August 16, 2001
ARAS-ASAN TIMBER CO., INC., petitioner, vs. COMMISSIONER OF INTERNAL REVENUE and HON. COURT OF APPEALS, respondents.
FACTS
Petitioner Aras-Asan Timber Co., Inc., a licensed forest concessionaire, purchased refined and manufactured mineral oil, motor fuel, and diesel fuel oil from Mobil Oil Philippines, Inc. from July 1, 1980, to October 31, 1981. These petroleum products were actually and exclusively used in its forest concession operations. Mobil Oil paid and passed on to petitioner the specific taxes on these fuels, as required under Sections 153 and 156 of the 1977 National Internal Revenue Code (NIRC). On September 23, 1982, petitioner filed a claim for a tax refund of P152,794.38 with the Commissioner of Internal Revenue, representing 25% of the specific taxes passed on to it, based on the Supreme Court ruling in Insular Lumber Co. vs. Court of Tax Appeals and Section 5 of Republic Act No. 1435 . To prevent the lapse of the two-year prescriptive period, petitioner filed a petition for review with the Court of Tax Appeals (CTA) on October 8, 1982. The CTA partially granted the refund but reduced the amount to P2,721.63, basing the 25% refund on the tax rates deemed paid under Sections 1 and 2 of R.A. No. 1435 , rather than the higher rates petitioner actually paid under the 1977 NIRC, following the precedent in Commissioner of Internal Revenue vs. Rio Tuba Nickel Mining Corporation. The Court of Appeals affirmed the CTA’s judgment. Petitioner appealed to the Supreme Court, arguing that the refund should be based on the taxes it actually paid.
ISSUE
Whether or not the lower court erred in its computation of the amount to be refunded to petitioner, specifically in basing the 25% refund on the tax rates under Sections 1 and 2 of R.A. No. 1435 instead of the higher rates petitioner actually paid under Sections 153 and 156 of the 1977 NIRC.
RULING
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that while petitioner is entitled to a refund under Section 5 of R.A. No. 1435 , the partial refund is in the nature of a tax exemption and must be construed strictly against the grantee. The Court found no legislative intent in R.A. No. 1435 or subsequent statutes authorizing a refund based on the higher tax rates claimed by petitioner. The Court reiterated its ruling in Davao Gulf Lumber Corporation vs. Commissioner of Internal Revenue, which upheld the computation of the refund based on the rates provided in Sections 1 and 2 of R.A. No. 1435 . The challenged decision was deemed to stand on sound statutory and jurisprudential foundations.