Commissioner of Internal Revenue v. Mobil Philippines
NEW DOCTRINEFacts
The Antecedents: Mobil Philippines, Inc. (Mobil) was assessed additional ad valorem taxes due to Board of Energy (BOE) Resolutions No. 87-02 and 87-03, which retroactively increased the cost recovery of oil companies. Mobil paid the additional ad valorem taxes but protested the 25% surcharge imposed for late payment. Procedural History: The Commissioner of Internal Revenue (CIR) denied Mobil's protest. The Court of Tax Appeals (CTA) sustained the CIR's position, holding Mobil liable for the surcharge. The Court of Appeals (CA) reversed the CTA, ruling that Mobil was not guilty of delay as there was no specified period for payment of the adjusted taxes due to their retroactive effect. The Petition: The CIR filed a petition for review with the Supreme Court, seeking to set aside the CA decision and reinstate the CTA ruling, thereby affirming Mobil's liability for the 25% surcharge.
Issue(s)
Whether Mobil is liable for the twenty-five percent (25%) surcharge for late payment of additional ad valorem taxes. Whether the Court of Appeals erred in reversing the Court of Tax Appeals' decision.
Ruling
The Supreme Court granted the Petition for Review, reversed the decision of the Court of Appeals, and affirmed the decision of the Court of Tax Appeals. Mobil was held liable for the twenty-five percent (25%) surcharge.
Ratio Decidendi
On the issue of liability for the surcharge: The Court held that Mobil was liable for the twenty-five percent (25%) surcharge. The Court reasoned that while it is literally true that the adjusted tax base did not exist fifteen (15) days after the physical removal of the product if such removal occurred more than fifteen (15) days before the promulgation of the BOE Resolutions, this contention proves too much. If taken literally, it would mean that the additional ad valorem taxes would be payable only when Mobil pleased, which is absurd and repugnant to public policy. The Court emphasized that petroleum products become subject to excise taxes the moment they come into existence, and the liability to pay, though unliquidated until withdrawal and determination of the tax base, arises at that point. The BIR's approach of considering the date of promulgation of the BOE Resolutions or the date of receipt of notice as the reckoning point for the fifteen (15)-day grace period was deemed reasonable and moderate, as it approximated the intent of Sections 110 and 128 of the 1977 Tax Code. Mobil was late in paying the additional ad valorem taxes regardless of whether the grace period was computed from the date of promulgation of the resolutions or the date of receipt of copies thereof, as it paid thirty-one (31) days after receipt of BOE Resolution No. 87-02 and fifty-nine (59) days after receipt of BOE Resolution No. 87-03. There was no discussion of the Court of Appeals reversing the Court of Tax Appeals' decision in the provided text.
Main Doctrine
The imposition of a twenty-five percent (25%) surcharge for late payment of additional ad valorem taxes is valid even when the tax base was retroactively increased by administrative resolutions, as the liability for the tax arises upon the existence of the product, and the grace period for payment is reckoned from the date of promulgation of the resolution or receipt of notice thereof, not from the date of physical removal when the tax base was not yet determined.