G.R. No. 120324 - Philex Mining Corp. vs. Commissioner of Internal Revenue

Petitioner PHILEX Mining Corporation (a domestic mining corporation) entered into a Mining License Agreement with the Ministry of Natural Resources.
From July 1, 1980 to December 31, 1981, PHILEX purchased refined and manufactured mineral oils, motor fuels, and diesel fuel oils, on which specific taxes totalling ₱2,492,677.22 were passed through.

On October 22, 1982, pursuant to Section 5 of Republic Act No. 1435, PHILEX filed with the Commissioner of Internal Revenue (CIR) a claim for a 25% partial refund amounting to ₱623,169.30, submitting affidavits proving actual use of the oils in mining operations.
While CIR’s action was pending, on November 16, 1982, PHILEX filed a petition for refund with the Court of Tax Appeals (CTA), praying for ₱623,169.30 plus 20% interest per annum and costs of suit.
On August 4, 1994, the CTA granted only ₱16,747.36 as refund (equivalent to 25% of the specific taxes “deemed paid” under Sections 1 and 2 of R.A. 1435) and denied interest, without pronouncement on costs.
On May 18, 1995, the Court of Appeals (CA) affirmed the CTA decision.

Applying Sections 1 and 2 of R.A. 1435 rather than the higher rates under Sections 142 and 145 (now 153 and 156) of the National Internal Revenue Code (NIRC).
Following the Supreme Court’s rulings in Commissioner of Internal Revenue vs. Rio Tuba Nickel Mining Corp. over Insular Lumber Co. vs. CTA.

Whether the CA erred in computing the 25% partial tax refund on the basis of the “amounts deemed paid” under Sections 1 and 2 of R.A. 1435 instead of the increased specific‐tax rates under Sections 142 and 145 (re-numbered as 153 and 156) of the 1977 NIRC, as amended by P.D. 1672 and E.O. 672.
Whether the CA incorrectly followed the Supreme Court’s decision in CIR vs. Rio Tuba Nickel Mining Corp., purportedly in conflict with Insular Lumber Co. vs. CTA, in determining the basis for the refund and denying interest.