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Tax Refund Claim under RA 1435 Denied

This case involves Davao Gulf Lumber Corporation seeking a tax refund from the Commissioner of Internal Revenue (CIR). Davao Gulf paid specific taxes on refined and manufactured oils and motor fuels and sought a 25% refund under Section 5 of RA 1435. The CIR granted a partial refund based on lower rates under RA 1435, not the actual higher rates paid under the National Internal Revenue Code (NIRC). The Supreme Court ruled that a tax exemption like the refund must be clearly stated in law and cannot be based on rates not in existence when RA 1435 was enacted. The Court found no language in RA 1435 or other laws authorizing a refund based on later, higher rates in the NIRC.

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328 views1 page

Tax Refund Claim under RA 1435 Denied

This case involves Davao Gulf Lumber Corporation seeking a tax refund from the Commissioner of Internal Revenue (CIR). Davao Gulf paid specific taxes on refined and manufactured oils and motor fuels and sought a 25% refund under Section 5 of RA 1435. The CIR granted a partial refund based on lower rates under RA 1435, not the actual higher rates paid under the National Internal Revenue Code (NIRC). The Supreme Court ruled that a tax exemption like the refund must be clearly stated in law and cannot be based on rates not in existence when RA 1435 was enacted. The Court found no language in RA 1435 or other laws authorizing a refund based on later, higher rates in the NIRC.

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Bryce King
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© © All Rights Reserved
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  • Conclusion
  • Rendi Rendi
  • Doctrine

12. Davao Gulf Lumber Corporation vs.

CIR,

G.R. No. 117359, 23 July 1998

Doctrine

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. Section 5, RA 1435 as a tax exemption, must be construed
strictissimi juris against the grantee.

Recit Ready

Davao Lumber paid the specific taxes imposed under Sec. 153 and 156 of the 1997 NIRC and then filed before CIR
a Claim for Refund based on Insular Lumber Co. v. CTA and Sec. 5 of RA 1435 and complied with its procedure.
Petitioner was granted a partial refund based on the rates deemed paid under RA 1435. Petitioner insists that the
basis be the higher rate under NIRC. SC Decided RA 1435 does not explicitly provide that a refund under it may be
based on higher rates which were nonexistent at the time of its enactment, this Court cannot presume otherwise.

Facts

 Davao Gulf Lumber Corporation, purchased from various oil companies refined and manufactured oils as well
as motor and diesel fuels for its exploitation and operation.
 Selling companies paid and passed the specific taxes imposed under Sec. 153 and 156 of the 1997 NIRC to
petitioner as purchaser who in turn filed before CIR a Claim for Refund for P120, 825 representing 25% of the
specific taxes actually paid based on Insular Lumber Co. v. CTA and Sec. 5 of RA 1435 and complied with its
procedure.
 Petitioner then filed before CA a Petition for Review: Favored petitioner to a partial refund P2,923 and based
on the rates deemed paid under RA 1435, not the higher rates actually paid under the NIRC.
 Insisting that the basis be the higher rate, petitioner elevated the case to the CTA who affirmed the CA's
decision.

Issue

W/N the provision of the NIRC be the one used as basis for the refund. [No]

Decision

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,
petitioner's 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.

In this case, there’s no expression of a legislative will authorizing a refund based on the higher rates claimed by
petitioner in RA 1435 and the subsequent pertinent statutes. The mere fact that the privilege of refund was included
in Section 5, and not in Section 1, is insufficient to support petitioner's claim. When the law itself does not explicitly
provide that a refund under RA 1435 may be based on higher rates which were nonexistent at the time of its
enactment, this Court cannot presume otherwise. A legislative lacuna cannot be filled by judicial fiat.

Petitioner also asserts that "equity and justice demand that the computation of the tax refunds be based on actual
amounts paid under Sections 153 and 156 of the NIRC." We disagree. According to an eminent authority on
taxation, "there is no tax exemption solely on the, ground of equity."

12. Davao Gulf Lumber Corporation vs. CIR, G.R. No. 117359, 23 July 1998 Doctrine A tax cannot be imposed unless it is suppor

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