TAX EXEMPTION; Since the partial refund authorized under sec. 5, R.A. 1435 is in the nature of a tax exemption, it must be construed stictissimi juris against the grantee.
FACTS: Petitioner Philex Mining Corporation entered into a Mining License Agreement with the then Ministry of Natural Resources (now the Department of Environment and Natural Resources). From the period 1980 to 1981, petitioner purchased from several oil companies, refined and manufactured mineral oils, motor fuels and diesel fuel oils. The specific taxes passed on to the petitioner amounted to P 2,492,677.22. Thereafter, pursuant to R.A. 1435, petitioner filed a claim for tax refund with the Commissioner of Internal Revenue for P 623,169.30, representing 25% of the specific taxes actually paid. Pending CIR action, petitioner filed a case for tax refund with the Court of Tax Appeals. The CTA rendered its decision, granting the petitioner's claim, but only to the extent of P 16,747.36. The Court of Appeals affirmed the decision of the CTA. Petitioner now contends that since it paid the taxes based on the increased rates (under the NIRC), its 25% refund must also be based on the increased rates.
ISSUE: Whether or not respondent court erred in basing the tax refund under sec. 1 and 2 of R.A. 1435, instead of the increased rates imposed by sec. 142 and 145 of the National Internal Revenue Code, as amended.
HELD: The Supreme Court ruled in the negative. Although Philex Mining corporation paid the taxes on their oil and fuel purchases based on the increased rates pursuant to the provisions of the NIRC, the latter law did not specifically provide for a refund based on the increased rates. Since the grant of refund privileges must be strictly construed against the taxpayer, the basis for the refund remains to be the amounts deemed paid under sec. 1 and 2 of R.A. 1435. Since the partial refund authorized under sec. 5, R.A. 1435 is in the nature of a tax exemption, it must be construed stictissimi juris against the grantee. For this reason, petitioner's claim for 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. When the law itself does not explicitly provide that a refund under R.A. 1435 may be based on higher rates which were non-existent at the time of its enactment, the Court cannot presume otherwise. A legislative lacuna cannot be filled by judicial fiat. [Philex Mining Corporation vs. Commissioner of Internal Revenue and CA; G.R. No. 120324; April 21, 1999; Second Division--- Quisumbing, J.]