COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. MOBIL PHILIPPINES, INC. AND THE COURT OF APPEALS, RESPONDENTS.

The Commissioner of Internal Revenue asks us to review and set
aside the Decision of the Court of Appeals^[1]
which, reversing the Court of Tax Appeals (“CTA”), held a twenty-five
percent (25%) surcharge imposed on private respondent Mobil Philippines, Inc.
(“Mobil”) for late payment of additional ad valorem
taxes as invalid.

Private respondent Mobil is a corporation engaged in marketing
aviation turbo (jet) fuel, diesel and bunker fuel oil to international
carriers. Mobil obtains its supply of
these petroleum products from Caltex Philippines., Inc. (“Caltex”)
drawing product from the latter’s refinery in Batangas or from Caltex’s
entitlement to processed product from the Bataan refinery of the Bataan
Refining Corporation at Limay, Bataan.

By its Resolution No. 87-02, dated 11 February 1987, the Board of
Energy (“BOE”) (now the Energy Regulatory Board [“ERB”])^[2]
increased by an average amount of 30.2 centavos per liter the “cost
recovery” (or “company take” or “company netback”) of
oil companies on the various petroleum products refined and marketed by them
locally. The effectivity of this
Resolution was, by its terms, made retroactive to 1 January 1987.^[3]

Mobil received a copy of BOE Resolution No. 87-02 on 16 February
1987.

On 20 February 1987, the Bureau of Internal Revenue
(“BIR”) addressed a demand letter to Mobil requiring payment of the
amount of P981,435.35 as additional ad valorem taxes. This letter read as follows:

“Mobil Philippines, Inc.

P.O. Box 246

Makati 3117, Metro Manila

Gentlemen:

Per Board of Energy (BOE) Resolution No. 87-­02 dated February
[11], 1987, increasing the company netback of the oil companies by an average
amount of 30.2 centavos (P0.302) per liter retroactive to January 1, 1987,
please be informed that there is still due from you the amount of NINE
HUNDRED EIGHTY ONE THOUSAND FOUR HUNDRED THIRTY FIVE PESOS & 35/100
(P981,435.35) for the month of January, 1987 as the result [of] the
corresponding change in the ad valorem tax of the different petroleum products
computed as follows:

In this connection, please be informed that payment of the above
amount, may be made through any authorized bank by presenting the Authority to
Issue Tax Receipt which can be obtained from the Oil & Miscellaneous Tax
Division, Room 810, BIR Bldg., Diliman, Quezon City.

(Signed)

Bienvenido A. Tan, Jr.

Commissioner”^[4]

The amount demanded was paid by Mobil on
12 March 1987.

By its Resolution No. 87-03, dated 16 March 1987, the BOE
increased once again the cost recovery of oil companies by an average amount of
54.7 centavos per liter of product sold. The effectivity of BOE Resolution No. 87-03 was retroactively set at 1
March 1981.^[5]

On 24 April 1987, another letter was sent by the BIR to Mobil demanding
payment of the amount of P1,305,455.76 as additional ad valorem
taxes on petroleum products withdrawn from the refinery during the period from
1 January 1987 to 31 March 1987 resulting from the operation of BOE Resolutions
Nos. 87-02 and 87-03. In addition, the
letter demanded payment of the amount of P326,363.94 as twenty-five percent
(25%) surcharge for failure to pay the additional ad valorem
taxes in a timely manner, i.e., within fifteen (15) days from the respective
dates of the two (2) BOE Resolutions.^[6]

On 15 May 1987, Mobil paid the amount of P1,305,455.76 comprising
the additional ad valorem taxes, but protested the imposition of
the twenty-five percent (25%) surcharge as “arbitrary and unfair.” In
respect of the surcharge, the contention of Mobil was set out in a letter dated
15 May 1987 addressed to the Commissioner of Internal Revenue by Mobil’s A.L.
Baldoza, Manager-Accounting, in the following terms:

“Reference is your OMTD Demand No. OP-008-87 dated April 24,
1987.

Please be advised that of the total demanded amount of
P1,631,819.70 we are herewith paying by May 15, 1987 the additional ad valorem
tax assessment of P1,305,455.76 in compliance with BOE Resolution Nos. 87-02
and 87-03 dated February 7, 1987 and March 16, 1987, respectively. We feel that the 25% surcharge that you are
including in your demand is arbitrary and unfair.

We did not pay the additional ad valorem tax within 15 days of
removal of the products made subject to the tax as required by Sec. 110,
Tax Code, as amended, because the adjustment in the tax base resulting from
the adjustment of the posted price under the BOE Resolutions dated Feb. 7, 1987
and March 16, 1987 were post facto or retroactive to January 1, 1987. At the time the excise tax or ad
valorem tax on the products were due (which was 15 days after removal of the
products), the additional tax base was not yet in existence, hence we could not
pay the appropriate tax due per said BOE Resolution. Therefore, to require us to pay the 25%
surcharge for payment beyond the 15-day period required in said Sec. 110, Tax
Code, as amended, would be unfair and arbitrary.

We, therefore, request, by this letter, that you delete the 25%
penalty charge in your OMTD Demand No. OP-008-87 dated April 24, 1987, which we
received on May 4, 1987.”^[7]

The Commissioner, in a subsequent letter of 13 July 1987,^[8]
rejected the protest and reiterated the demand for the twenty-five percent
(25%) surcharge. In this letter, the
Commissioner stated that the dates of the two (2) BOE Resolutions were
“by inference the date of removal of the products from the place of
production mentioned in Section 110 [1977 Tax Code, as amended].” The
Commissioner recalled that before the BOE issued any resolution increasing the
cost recovery of oil companies, the BOE invariably held public hearings on the
applications for price increases by the oil companies, and that at these
hearings,

“[i]n arriving
at a certain rate, it is the group of oil companies that provide the BOE,
among others, with figures used as basis in analyzing the correctness of
the [application], amount of oil company recovery to be added to the current
oil company take in arriving at the posted price, increases in cost of
material, cost of manufacturing, sales profits, and so forth.

Conceiving the above pictures of the process, it becomes unbelievable
that you are not aware of the existence of the posted price of any particular
oil product and the period to be covered by the increase of said particular
products, as well as the date of issuance of the resolution of which you
are presumably informed in the course of the hearings as one of the
petitioners. x x x.” (Underscoring
supplied)

Mobil went to the Court of Tax Appeals on a Petition for Review
assailing the assessment of the twenty-five percent (25%) surcharge by the
BIR. On 31 May 1991, the CTA rendered
judgment sustaining the position taken by the BIR that the date of the
promulgation of the BOE Resolutions was to be deemed the date of the removal of
the petroleum products involved, considering that “the liability for the
additional ad valorem taxes arose as a consequence of the
promulgation of aforesaid BOE Resolutions and was determinable only at that
time.” Mobil’s Petition was accordingly dismissed.

Still dissatisfied, Mobil went before the Court of Appeals on
Petition for Review. In due course of
time, the Court of Appeals rendered a decision which reversed the CTA
judgment. The Court of Appeals rejected
the position of the BIR which had been sustained by the CTA that the date of
payment of the adjusted or additional ad valorem taxes should be
fifteen (15) days from the dates of the BOE Resolutions, such dates being
deemed to be the dates of removal of the covered product from the petroleum
refinery. The reasoning of the Court of
Appeals is set out in the following paragraphs:

“A surcharge is an amount imposed by law as an addition to the
main tax in case of delinquency. Section 282 of the 1987 Tax Code [should be 1977 Tax Code, as amended]
provides that a penalty equivalent to 25% of the amount due shall be imposed in
case of failure to pay the tax within the time prescribed for its payment,
among others. In other words, they are imposed in case of delay in the payment
of the tax due.

In the case at bar, the petitioner is not guilty of delay in the
payment of the adjusted excise tax for the reason that there was no period
specified in the
Resolutions for the payment of the said taxes. One cannot incur in delay when there is no period fixed for
payment.

The petitioner also did not incur in delay since the excise taxes
due on the withdrawals it made in the months of January, February, and March,
previous to the effectivity of the Resolutions in question where duly
paid. As regards the adjusted ad
valorem tax, the petitioner likewise paid the same after demand was made by
respondent.

The period provided for in the Tax Code cannot be made to apply
in the case of the adjusted taxes which were made retroactive to January 1, and
March 1, 1987 for the reason that such period refers to the ‘actual’ removal
of the products. In this case, the
fifteen day period from the actual removal of the petroleum products had
already elapsed even prior to the issuance of the resolutions aforementioned. Respondent Commissioner claims the date of the
Resolutions to be, by inference, the date of removal of the products
(Attachment B, Petition). It is however
the established rule in the interpretation of tax statutes not to extend their
provisions by implication (Marinduque Iron Mines v. Municipal Council of
Hinabangan, et al., 11 SCRA 416), beyond the clear import of the language
employed, or to enlarge their scope as to include matters which are not
specifically pointed out. x x x.

x x x                                    x x x                               x x x”^[9]

(Underscoring partly in
the original and partly supplied) (Brackets supplied)

The issue now raised by the BIR before this Court is the same
issue presented by Mobil to the CTA and the Court of Appeals: whether or not Mobil was correctly held
liable for the twenty-five percent (25%) surcharge for late payment of
additional ad valorem taxes which became due by reason of the
operation of the two (2) BOE Resolutions here involved.

We consider that the Court of Appeals fell into reversible error
when it rejected the twenty-five percent (25%) surcharge assessed against
private respondent Mobil.

The first point that should be made is that the problem presently
before this Court is an exceptional problem and should not, in the normal course of events, arise
at all. The normal course of events in
respect of excise taxes of petroleum products may be summed up summarily in the
following terms.

There are two (2) kinds of excise taxes imposed in respect of the
manufacture or production of the particular kinds of petroleum products covered
by BOE Resolutions Nos. 87-02 and 87-03.^[10] The
first type of excise tax, which is referred to as “specific tax” is
“imposed and based on weight or volume capacity or any other physical unit
of measurement;” the second type of excise tax imposed on the manufacture
of petroleum products is “based on selling price or other specified value
of the article” and is referred to as “ad valorem
tax.”^[11]
More specifically, the “specific tax” on petroleum products is
computed on a per liter basis; the ad valorem tax, in contrast,
was computed on the “wholesale posted price, net of specific and domestic ad
valorem taxes on the oil products as approved by the Board of Energy
[now ERB].”^[12]

The time prescribed for payment of both kinds of excise taxes
imposed upon petroleum products was specified in Section 110 of the 1977 Tax
Code, as amended, in the following manner:

“Sec. 110. Payment
of excise taxes on domestic products — (a) Persons liable; time for
payment — Unless otherwise especially allowed, excise taxes on domestic
products shall be paid by the manufacturer or producer before removal from the
place of productions; Provided, however, That excise tax on locally
manufactured petroleum products levied under Section 128 of this Title
shall be paid within fifteen (15) days from the date of removal thereof from
the place of production. Should
domestic products be removed from the place of production without the payment
of the tax, the owner or person having possession thereof shall be liable for
the tax due thereon.

x x x                                    x x x                               x x x”^[13]

(Underscoring supplied)

The above paragraph of Section 110 should be read in conjunction
with the following provisions of Section 128 of the same Code:

“Sec. 128. Manufactured Oils and Other Fuels. — There
shall be collected on refined and manufactured mineral oils and motor fuels,
the following excise taxes which shall attach to the articles
hereunder enumerated as soon as they are in existence as such: x x x”^[14]
(Underscoring supplied)

Reading Section 128 and Section 110 together, it will be seen
that domestically refined and manufactured mineral oils and motor fuels become
subject to excise taxes as soon as they come into existence as such. In respect of most other kinds of
articles also subject to excise taxes, the excise taxes are payable by the
manufacturer or producer even before removal from the place of production. In the case of locally manufactured
petroleum products, however, the manufacturer is given what is in effect a
fifteen (15)-day grace period: those
excise taxes must be paid within fifteen (15) days from the date of removal of
the petroleum product from the place of production. Specific taxes on petroleum products are simply computed on the
basis of a given number of pesos or centavos per liter or other relevant unit
of physical measurement. Upon the other
hand, as already noted, the ad valorem tax on petroleum products
was calculated on the basis of the wholesale posted price at the time of
removal from the refinery. As we
understand it, such wholesale posted price was a known or determinable
quantity, it being fixed by the BOE upon consideration of a number of factors
such as the landed cost of the raw material (i.e., crude oil), cost of
manufacturing, etc.

The exceptional situation presently before this Court arose
because the cost recovery of oil companies was allowed to increase, and the
wholesale posted price correspondingly allowed to adjust upward, not only
in respect of petroleum products removed from the refinery after the date of promulgation
of the relevant BOE Resolution, but also in respect of product removed
sometime before the actual promulgation of such Resolution. In other words, the giving of retroactive
effect to the BOE Resolutions created a problem by permitting the increase
of the wholesale posted price (the tax base on which ad valorem
taxes were computed) in respect of product already previously physically
removed from the refinery but not yet sold or otherwise disposed of by the
oil companies at the time of the promulgation of the relevant BOE
Resolutions.

The second point that may be stressed is that the giving of
retroactive effect to BOE Resolutions Nos. 87-02 and 87-03 benefitted private
respondent Mobil, Caltex and all the other oil companies. The recoverable value to Mobil of product
previously physically removed from the refinery but not yet disposed of at the
time of issuance of the BOE Resolutions obviously increased; Mobil could,
thereafter, charge and recover a higher peso value than the wholesale posted
price existing at the time of actual or physical removal of the product. The BIR thus correctly required the
manufacturer to pay additional ad valorem taxes on the additional
amount which the manufacturer would receive from the sale of the product
previously or already removed from the place of production. Mobil did not dispute, as it could not have
reasonably disputed, its liability for such additional ad valorem
taxes.

We turn to the contention of Mobil in respect of its liability
for the twenty-five percent (25%) surcharge for late payment of the additional ad
valorem taxes. It is, of course, literally true that the adjusted tax base, or
the wholesale posted price as increased by or as a result of the operation of
the two (2) BOE Resolutions, did not exist fifteen (15) days after physical removal of the product
from the refinery provided such product had been physically removed more than
fifteen (15) days before the actual dates of promulgation of
the two (2) BOE Resolutions. The basic contention
of Mobil may hence be seen to be that the liability to pay ad valorem taxes accrued fifteen (15) days after physical removal
of product from the oil refinery. At
the time such physical removal had been effected, the adjusted tax base, i.e.,
the wholesale posted price as increased by the effects of the two (2) BOE
Resolutions, did not exist and was not determinable. There was, therefore, in Mobil’s contention,
no prescribed time for payment of the additional ad valorem taxes
which became due by reason of the increases in cost recovery in respect of
product withdrawn from the refinery during the period of the
retroactive application of the two (2) BOE Resolutions. If there was no prescribed time for payment,
it followed, as a matter of strict logic (in the mind of Mobil and the Court of
Appeals), that no liability for delay in payment of such additional ad valorem
taxes could arise.

The principal difficulty with the basic contention of Mobil is
that it proves too much. If that
contention were taken literally and seriously, the additional ad valorem
taxes on the previously withdrawn petroleum products would be payable only when
it would please Mobil to pay such taxes. We consider such a result to be absurd; it is certainly repugnant to
public policy, for the additional ad valorem taxes were clearly
due on the additional value undeniably accruing to Mobil’s benefit in respect
of previously withdrawn product but not yet disposed of by the time the
increase in cost recovery of oil companies was authorized by the BOE
Resolutions.

As noted earlier, petroleum products become subject to excise
taxes the moment they come to existence. It may also be noted that Section 110 which prescribed the time for
payment of excise taxes on locally manufactured petroleum product did not
condition liability for such excise taxes upon the existence of any particular
wholesale posted price. The legal
liability to pay the excise taxes arose as soon as the relevant petroleum
product came into chemical existence; that liability was, however, unliquidated
until the product was withdrawn and the volume of withdrawal determined, and
until the relevant whole­sale posted price was determined. Thus, if Section 110 were to be read as
literally and strictly as the Court of Appeals and Mobil believe it should,
then the BIR would have been quite justified in computing the period of delay
or default from the time of actual physical removal of the product
involved, upon the theory that the liquidation of the amount of ad valorem
taxes due retroacts to the time of physical removal of the product from the refinery.^[15] But the BIR did not do so; instead, it
considered, as already seen, the product as having been constructively removed
from the refinery only on the dates of promulgation of the two (2) BOE
Resolutions and counted the statutory fifteen (15) day-grace period from such
dates.

Thus, the BIR considered the impracticability of computing the
full or adjusted ad valorem taxes in this case as constituting a
justification or excuse for deferring payment of such additional ad valorem
taxes. That justification disappeared
as soon as the BOE Resolutions were issued and the increased wholesale posted
prices were determined. We are unable to
characterize the position of the BIR as merely capricious or oppressive; to the
contrary, such position appears to this Court as reasonable and moderate and as
close to the intent of Sections 110 and 128, 1977 Tax Code, as it was possible
to get under the situation.

It may well be that the BIR could have gone the full length or
course apparently suggested by gentle reason on this matter, that is, the
previously physically withdrawn product could have been regarded as
constructively removed on the date that the oil companies received copies of
the official texts of the two (2) BOE Resolutions. In this connection, we understand the letter
(quoted above) dated 24 April 1987 of the then Commissioner of Internal Revenue
Bienvenido A. Tan, Jr. to be saying that at all events, the oil companies had actual
knowledge of the increase in wholesale posted prices resulting from the
authorization of increased cost recovery for the oil companies. The Court notes, however, that whether the
fifteen (15) day grace period for payment be computed from the dates of
promulgation of the two (2) BOE Resolutions, or from the date of actual receipt
of a copy of those two (2) BOE Resolutions (which date may realistically have
differed from oil company to oil company), private respondent Mobil paid the
additional ad valorem taxes due after expiration of such
fifteen (15) day period. Mobil was, in
other words, late in any case in effecting payment of the additional ad valorem
taxes. Mobil paid the additional ad
valorem taxes arising as a result of BOE Resolution No. 87-02 on 12
March 1987, or thirty-one (31) days after receipt of a copy of that BOE
Resolution. Mobil paid the
additional ad valorem taxes arising as a result of BOE Resolution
No. 87-03 on 15 May 1987, or fifty-nine (59) days after receipt of a copy of
BOE Resolution No. 87-03.

WHEREFORE, for all the foregoing, the Petition
for Review is GRANTED DUE COURSE, the
Comment of private respondent Mobil CONSIDERED
as its Answer to the Petition and the challenged Decision of the Court
of Appeals is hereby REVERSED, and
the Decision of the Court of Tax Appeals dated 31 May 1991 AFFIRMED. No pronouncement as to costs.

SO ORDERED.

Bidin, Romero,
Melo, and Vitug, JJ., concur.

---

^[1]
C.A.-G.R. SP No. 25791, 31 March 1992, Camilon, J, ponente, and
Imperial and Garcia, JJ., concurring.

^[2]
The BOE was reconstituted into the ERB by Executive Order No. 172, dated 8 May
1987 (83 O.G. 2904 [1987]).

^[3]
The text of Resolution No. 87-02 follows:

“WHEREAS, the FOB price of
crude during the period November-December, 1986 stood at an average of $13.64
per barrel, which, when compared with that prevailing during the period
September-October 1986 of $11.80 per barrel, results in a further increase in
the oil companies’ peso landed cost of crude by an average amount of 30.2
centavos (P0.302) per liter of product;

WHEREAS, the Oil Price
Stabilization Fund (OPSF) was established to absorb fluctuations in petroleum
product costs arising from changes in world market price of crude or in the
exchange rate;

WHEREAS, it is necessary to allow
the oil companies to recover from the OPSF the said additional cost of
importation and thereby preserve and maintain the existing price levels of
petroleum products.

WHEREFORE, considering the
foregoing, and pursuant to Letter of Instructions No. 1441 dated November 20,
1984, this Board hereby issues the following directives:

1. The cost recovery of the oil
companies on the various petroleum products refined and/or marketed by them
locally is hereby increased by an average amount of 30.2 centavos (P0.302) per
liter. With the said increase in
company net-back, the oil companies’ cost recovery on the different petroleum
products shall now be as follows:

In Pesos Per Liter

Product                                                    Oil
Company Recovery

Premium Gasoline                                                3.7248

Regular
Gasoline                                                 3.3768

Avturbo                                                                3.4828

Kerosene                                                             3.4438

Diesel                                                                   2.8708

Fuel
Oil                                                                2.2065

Feedstock                                                            2.2065

LPG                                                                      2.2850

Asphalts                                                               2.6658

Solvents                                                               3.4058

2. The OPSF rates per liter on the
different petroleum products are hereby adjusted in accordance with the
following schedule:

In Pesos Per Liter

Product                                                               
OPSF

Premium
Gasoline                                                (0.529)

Regular
Gasoline                                                 (0.569)

Avturbo                                                                (0.327)

Kerosene                                                             (0.002)

Diesel
                                                                  0.458

Fuel
Oil                                                                (0.367)

Feedstock                                                            (0.367)

LPG                                                                      0.398

Asphalts                                                  0.027

Solvents                                                               (0.269)

3. This Resolution shall not affect the present wholesale and pump/retail
prices of petroleum products.

The company netback and OPSF rates prescribed in the foregoing already
include the allocation of the 50.2 centavos (P0.502) per liter increase in
company netback earlier authorized in BOE Resolution No. 86-07.

The effectivity of this Resolution shall retroact to January 1, 1987.

Let copies of this Resolution be furnished the oil companies, the
Ministry of Finance, the Ministry of Trade and Industry, the National Economic
Development Authority, the Office of Energy Affairs, the Bureau of Internal
Revenue and other entitled concerned, for their information and guidance.”
(Annex “C” of Petition for Review filed by Mobil Phils., Inc., CTA
Case No. 4183.)

^[4]
Annex “E”, Petition for Review by Mobil, id.; Records,
p. 18; underscoring supplied.

^[5]
Resolution No. 87-03 read as follows:

“WHEREAS, in view of the
continuing rise in crude oil prices in the international market, the FOB cost
of crude imports during the period January-February, 1987 had increased from
the previous level of $13.64 per barrel to $16.90 per barrel;

WHEREAS, such increases in FOB cost
had inevitably raised the oil companies’ peso landed cost of crude by P82.594
per barrel, or P0.547 per liter of product;

WHEREAS, in order to maintain the
existing price levels of petroleum products, it is deemed necessary and
appropriate that the oil companies be allowed to recover their additional cost
of importation from the Oil Price Stabilization Fund (OPSF).

WHEREFORE, premises considered, and
pursuant to Letter of Instructions No. 1441 dated November 20, 1984, this Board
hereby issues the following directives and dispositions:

1. The existing cost recovery of
the oil companies on the different petroleum products is hereby increased by an
average amount of 54.7 centavos (P0.547) per liter of product sold, the same to
allocated as follows:

In Pesos Per Liter

Product                                                    Oil
Company Recovery

Premium
Gasoline                                                .144

Regular
Gasoline                                                 .116

Avturbo                                                                .414

Kerosene                                                             .406

Diesel
Oil                                                              .707

Fuel
Oil                                                                .683

Feedstock                                                            .683

LPG                                                         .370

Asphalts .683

Solvents                                                              
.406

2. The oil companies are authorized to reduce their payments to the OPSF by
an average amount of 62.7 centavos (P0.627) per liter of product sold in
accordance with the following schedule of allocation:

In Pesos Per Liter

Product                                                    Oil
Company Recovery

Premium Gasoline                                                .180

Regular Gasoline                                                 .145

Avturbo                                                                .517

Kerosene                                                             .463

Diesel Oil                                                              .862

Fuel Oil                                                                .731

Feedstock                                                            .731

LPG                                                                      .403

Asphalts .779

Solvents                                                               .508

3. This Resolution shall not affect the
existing wholesale and pump/retail prices of petroleum products.

The effectivity of this Resolution
shall retroact to March 1, 1987.

Let copies hereof be furnished the
oil companies, the Ministry of Finance, the Ministry of Trade and Industry, the
National Economic Development Authority, the Office of Energy Affairs, the
Bureau of Internal Revenue and other entities concerned, for their information
and guidance.” (Annex “D” of Petition for Review by Mobil, supra
note 3.)

^[6]
The Commissioner wrote:

“Per BOE Resolution Nos. 87-02
and 87-03 dated February [11], 1987 and March 16, 1987, respectively, the
posted price of your petroleum products subject to ad valorem tax and
removed from January 1, 1987 to March 31, 1987 was increased which
correspondingly increased your ad valorem tax liability. More than fifteen (15) days from the date
of the aforesaid BOE Resolutions have already elapsed but our records do not
show that you have paid the additional ad valorem tax as a consequence thereto.

In view thereof, demand is made
upon you to pay the sum of ONE MILLION SIX HUNDRED THIRTY ONE THOUSAND EIGHT
HUNDRED NINETEEN PESOS & 70/100 (P1,631,819.70) and computed as follows:

Product             Period   Volume Increase Tax

                (Liters)    in Tax Deficiency

Jet Fuel                          January

(add’l)   794,921 P0.311 P 247,220.43

February 2,637,621 0.311 820,300.13

March   1,271,872 0.103             131,002.81

Diesel                January

(add’l)   584,330 0.183             106,932.39

P1,305,455.76

Plus:     25%
surcharge for failure to

pay the deficiency tax
due per

BOE Resolution Nos.
87-02 and

87-03 dated Feb. [11]
and March

16, 1987,
respectively……………. 326,363.94

Total Amount Due ………………………… P1,631,819.70″

In this connection, you are hereby
requested to pay the abovementioned amount plus 20% interest per annum not
later than May 15, 1987, otherwise the interest will continue to run until date
of payment.” (Annex “F,” Mobil’s Petition for Review, id.)

^[7]
Annex “G,” Mobil’s Petition for Review, id.;
underscoring supplied.

^[8]
Annex “A,” Mobil’s Petition for Review, id.

^[9]
Court of Appeals’ Decision, pp. 3-4; Rollo, pp. 25?26.

^[10]
Certain other kinds of petroleum products are subject to only one (1) and not
two (2) excise taxes, e.g., lubricating oils, processed gas, greases and waxes,
etc.; see Section 128, 1977 Tax Code, as amended.

^[11]
Section 109, 1977 Tax Code, as amended by Executive Order No. 22, dated 25 June
1986 (82 O.G. 2965 [1986]). This
Section now appears as Section 126, 1986 Tax Code as amended by Executive Order
No. 273, dated 25 July 1987 (83 O.G. [Supp.] 3528 [1987]). Executive Order No. 273, by its terms, went
into effect on 1 January 1988 (except Section 25 [c] thereof which went into
effect upon issuance of Executive Order No. 273). Thus, during the period relevant for present purposes, the
applicable statutory provisions are those found in the 1977 Tax Code, as
amended, and we have preferred to refer to these provisions by their old
section numbers in the text of this Decision.

^[12]
Section 128, 1977 Tax Code, as amended. This Section, renumbered as Section 148 of the 1986 Tax Code, as amended
by Executive Order No. 273, now provides as follows:

“The ad valorem
tax imposed in this paragraph shall be based on the company take or netback on
the product as approved by the Energy Regulatory Board including the said ad
valorem tax.”

In other words, the tax base for
computing ad valorem taxes on domestically manufactured petroleum
products is now, simply, the “cost recovery” allowed by ERB to oil
companies.

^[13]
Section 110 is now renumbered as Section 127 (a) of the 1986 Tax Code, as
amended by Executive Order No. 273 dated 25 July 1987.

^[14]
Section 128 is now renumbered as Section 145 of the 1986 Tax Code, as amended
by Executive Order No. 273 dated 25 July 1987.

^[15]
In the same way that the increase of “cost recovery” by oil companies
was made retroactive by the BOE Resolutions. It may be noted once more that “cost recovery” or
“company take” or “netback” has replaced “wholesale
posted price” for purposes of computation of ad valorem
taxes on locally produced petroleum products, under renumbered Section 145 of
the 1986 Tax Code as amended by Executive Order No. 273, dated 25 July
1987.