11.) DAVAO GULF LUMBER CORPORATION, PETITIONER, VS.
VS. the claim for refund should indeed be computed on the basis of the amounts deemed
COMMISSIONER OF INTERNAL REVENUE AND COURT OF APPEALS,
RESPONDENTS.
DOCTRINE:
Because taxes are the lifeblood of the nation, statutes that allow exemptions are construed
strictly against the grantee and liberally in favor of the government. Otherwise stated, any
exemption from the payment of a tax must be clearly stated in the language of the law; it
cannot be merely implied therefrom.
FACTS:
Davao Lumber is a licensed forest concessionaire. For its operation, it purchased
from different suppliers, oil, refined and manufactured oil, and also diesel and fuels.
As per mandate of the Secs. 153 and 156 of NIRC, oil companies paid of specific
taxes for sale of the products. Where later was passed to Davao Gulf, as it added
such amount to the purchase price of the oils.
On Dec 13, 1982, Davao Lumber filed for claim for refund in the amount of
P120,825.11 which was 25% of the specific taxes actually paid by it for the oil
purchased for its operations. The claim was based on Insular Lumber Co. vs. Court
of Tax Appeals and Section 5 of RA 1435.
Davao Lumber has shown to have complied with all procedure for refund.
Later, such case from CIR was raised to CTA, where the latter found Davao Lumber
entitled BUT only to P2923.15. This on the basis that Davao Lumbers claim for
certain periods had already prescribed. Further, the CTA said that computation
should be based on the rates deemed paid under RA 1435, and not on the higher
rates paid by Davao Lumber under NIRC.
Davao Lumber insisted as it elevated to the CA that the refund should be based on
the Secs. 153 and 156 of the NIRC and not on Sec 5 of RA 1435. But, the CA still
rendered decision unfavourable to Davao Lumber. The Court of Appeals held that
paid under Sections 1 and 2 of RA 1435. In so ruling, it cited our pronouncement in
Commissioner of Internal Revenue v. Rio Tuba Nickel Mining Corporation and our
subsequent Resolution dated June 15, 1992 clarifying the said Decision. Respondent
Court further ruled that the claims for refund which prescribed and those which were
not filed at the administrative level must be excluded.
ISSUE:
WON computation of 25% tax refund should be based on RA 1435 or the highr rates
prescribed in NIRC. (Computation should be based on RA 1435)
HELD:
The Supreme Court DENIED Davao Lumbers petition and affirmed lower courts decisions.
Supreme Court still held that Davao Lumber is entitled to refund under RA 1435.
Accd to said law, the special tax on oils, diesel, and fuel are for the Highway Special
Fund. Since, mining companies dont use public highways and such machinery and
vehicles are only used within their compounds, they are given special 25% tax
refund.
But nevertheless, a tax cannot be imposed unless it is supported by the clear and
express language of a statute; on the other hand, once the tax is unquestionably
imposed, [a] claim of exemption from tax payments must be clearly shown and
based on language in the law too plain to be mistaken. Since the partial refund
authorized under Section 5, RA 1435, is in the nature of a tax exemption, it must be
construed strictissimi juris against the grantee. Hence, petitioners claim of 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.
SC provided that after scrutiny of the statutes, Section 5 of RA 1435 does not make
any clear expression authorizing refund based on other higher rates.