DAVAO GULF LUMBER CORP v.

CIR
GR No. 117359, July 23, 1998
293 SCRA 77

FACTS: Republic Act No. 1435 entitles miners and forest concessioners to the refund of 25% of the specific
taxes paid by the oil companies, which were eventually passed on to the user--the petitioner in this case--in
the purchase price of the oil products. Petitioner filed before respondent Commissioner of Internal Revenue
(CIR) a claim for refund in the amount representing 25% of the specific taxes actually paid on the above-
mentioned fuels and oils that were used by petitioner in its operations. However petitioner asserts that equity
and justice demands that the refund should be based on the increased rates of specific taxes which it
actually paid, as prescribed in Sections 153 and 156 of the NIRC. Public respondent, on the other hand,
contends that it should be based on specific taxes deemed paid under Sections 1 and 2 of RA 1435.

ISSUE: Should the petitioner be entitled under Republic Act No. 1435 to the refund of 25% of the amount of
specific taxes it actually paid on various refined and manufactured mineral oils and other oil products, and
not on the taxes deemed paid and passed on to them, as end-users, by the oil companies?

HELD: No. According to an eminent authority on taxation, "there is no tax exemption solely on the ground of
equity." Thus, the tax refund should be based on the taxes deemed paid. 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.