GR 234531; (July, 2019) (Digest)
G.R. No. 234531 July 10, 2019
AGUSAN WOOD INDUSTRIES, INC., Petitioner vs. SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, Respondent
FACTS
Petitioner Agusan Wood Industries, Inc. (AWII) paid forest charges in 1995 for logs cut from its concession. AWII failed to retrieve these logs and later requested a refund or tax credit from the DENR, arguing that since the logs were not hauled, the charges should not have become due. The DENR Secretary initially granted the refund in 2000 but later reversed this in 2005, denying the request on the grounds that no law authorized such a refund and there was no appropriation for it.
AWII appealed to the Office of the President, which affirmed the DENR’s denial, stating the DENR Secretary lacked jurisdiction to authorize a tax refund. The Court of Appeals subsequently dismissed AWII’s petition, ruling that forest charges are internal revenue taxes, thus the claim for refund or credit falls under the authority of the Commissioner of Internal Revenue (CIR) and is governed by the prescriptive periods in the Tax Code.
ISSUE
Whether forest charges are considered internal revenue taxes, thereby placing the authority to grant refunds or tax credits with the Commissioner of Internal Revenue and subjecting such claims to the prescriptive periods under the National Internal Revenue Code.
RULING
The Supreme Court denied the petition, affirming the Court of Appeals. The Court held that forest charges are indeed internal revenue taxes. This classification is rooted in historical tax legislation, including Section 25 of the Internal Revenue Law of 1904 and Section 21 of the 1939 Internal Revenue Code, which explicitly listed charges for forest products as internal revenue. This treatment was carried forward under the 1977 and 1997 National Internal Revenue Codes.
Consequently, the authority to grant tax refunds or credits for forest charges lies exclusively with the Commissioner of Internal Revenue, not the DENR Secretary. As internal revenue taxes, claims for refund are strictly governed by Section 204(C) of the 1997 NIRC, which mandates that a written claim must be filed with the CIR within two years from the date of payment. AWII filed its claim with the DENR in 1998, three years after its 1995 payment. Therefore, the claim was not only filed with the wrong agency but was also instituted beyond the two-year prescriptive period. Tax refunds are construed strictly against the taxpayer, and AWII failed to prove compliance with these mandatory conditions, thus barring its claim forever.