Facts:

The case involves Aras-Asan Timber Co., Inc. (petitioner) as the appellant against the Commissioner of Internal Revenue and the Court of Appeals (respondents). The events leading to the case began when Aras-Asan Timber Co., Inc., a duly-licensed forest concessionaire, entered into a Timber Licensing Agreement with the Ministry of Natural Resources (now the Department of Environment and Natural Resources). Between July 1, 1980, and October 31, 1981, the petitioner purchased refined and manufactured mineral oil, motor fuel, and diesel fuel oil from Mobil Oil Philippines, Inc. These petroleum products were used exclusively for the operation of its forest concession. Mobil Oil Philippines, Inc. paid the specific taxes on these products as mandated by Sections 153 and 156 of the 1977 National Internal Revenue Code (NIRC) and passed these costs onto the petitioner.

On September 23, 1982, the petitioner filed a claim for a tax refund amounting to P152,794.38, which represented 25%...

Facts:

1. Parties Involved:

   • Petitioner: Aras-Asan Timber Co., Inc., a licensed forest concessionaire.
   • Respondents: Commissioner of Internal Revenue and the Court of Appeals.

2. Background:

   • Petitioner entered into a Timber Licensing Agreement with the Department of Environment and Natural Resources (DENR).
   • From July 1, 1980, to October 31, 1981, petitioner purchased refined and manufactured mineral oil, motor fuel, and diesel fuel oil from Mobil Oil Philippines, Inc. These products were exclusively used in its forest operations.
   • Mobil Oil Philippines, Inc. paid and passed on to petitioner the specific taxes on these products, which were included in the purchase price.

3. Claim for Refund:

   • On September 23, 1982, petitioner filed a claim for a tax refund of P152,794.38, representing 25% of the specific taxes passed on to it.
   • The claim was based on Section 5 of Republic Act No. 1435 and the Supreme Court ruling in Insular Lumber Co. vs. Court of Tax Appeals.
   • Petitioner submitted affidavits from its president, cost accountant, chief accountant, and two other forest concessionaires to prove the actual use of the petroleum products in its operations.

4. Legal Proceedings:

   • Petitioner filed a petition for review with the Court of Tax Appeals (CTA) on October 8, 1982, to prevent the lapse of the two-year prescriptive period for claiming a refund.
   • On December 17, 1993, the CTA granted a reduced refund of P2,721.63, basing the computation on Sections 1 and 2 of R.A. No. 1435 instead of Sections 153 and 156 of the 1977 NIRC.
   • The Court of Appeals affirmed the CTA's decision, prompting petitioner to file this appeal.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Strict Construction of Tax Exemptions:

   • Tax refunds, being in the nature of tax exemptions, must be strictly construed against the taxpayer. The burden is on the taxpayer to prove entitlement to the refund.
   • The Court emphasized that legislative intent must be clear for a refund to be based on higher rates imposed by subsequent laws.

2. Legislative Intent:

   • The Court found no explicit legislative will in R.A. No. 1435 or subsequent statutes to authorize a refund based on higher rates.
   • A legislative lacuna cannot be filled by judicial fiat. The Court cannot presume legislative intent where none is expressed.

3. Precedent:

   • The Court relied on its ruling in Davao Gulf Lumber Corporation vs. Commissioner of Internal Revenue, which upheld the computation of refunds based on the rates in R.A. No. 1435.
   • The Court reiterated that the challenged decision of the Court of Appeals was consistent with statutory and jurisprudential foundations.

4. Fairness and Equity:

   • The Court rejected petitioner's argument that the computation was unfair or oppressive, emphasizing that the law must be applied as written, and equity cannot override clear statutory provisions.