Baguio Gold Miming Company vs. « CET.A, et al.

REPUBLIC OF THE PHILIPPiN ES Py

COURT OF TAX APPEALS

QUEZON CITY

BAGUIO GOLD MIMING COMPANY, Petitioner, = versus « CeT.A, CASE NO, 2152

THE COMMISSIONAR OF INTERMAL

‘Respondent, REVENUE, We (76 .

pDECE SION Petitioner seeks the refund of 952,464,684 | Sepresenting alleged overpaid ad valorem texes on the gold extracted or produced by it from April 18, 1962 to January 16, 1967, Petitioner is e domestic corporation with = address at Nquiteble Bank Building, Juan Luna, Manila, It is engeged in mining operetion for the pro«- duction of gold, Prom April 18, 1962 to January 16, 1967, petitioner paid 211 the ed valorem taxes on the gold extrected or a by 4t at the mines, Seid taxes were at first collected by respondent at. the rete of 1<1/2% based on the world price of gold at $35.00 per ounce set by the doard of Governors of the Internationel Monetary Fund, In effect, et the time material to this case, the standard price of gold in the Philippines is 7136,50 per ounce considering that the conver .

& » 165

DecIciIon «

-CTA CASE WO, 2152 sion rate of One US doller is equivalent to *3,90, ‘In subsequently computing the 1-1/2% sd valorem tex on gold extracted or produced by petitioner, respondent Comoissioner of Internel Revenue added to the “actual market value” of gold the correspond- ing amount of subsidy received by the petitioner from the Gold Subsidy Board created under Republic Act So, 4859 entitled “An Act to Provide Assistance to the Gold Mining Industry") which took effect on September 2, 1966, Section 5 thereof provides as follows:

oy entitled to the official paseo as heredne uncer Seetion 2(r) Sovexnmenh of its procustion wit Om) ffectivity of this Ac gold as se such mines eka bo ake Saati ch ers aa defined under Section 2 ay | Gthin the effect Wie Rowevar, ‘That the sbove pfovisTon= nsteithes & moo Case £ gold;

Seles fists sega ot cea

SE

DECISION «

CTA CASE 80, 2152 On December 26, 1967, petitioner, thru the accounting firm of De] Rosario & Co,, requested pecpentioat the sefenh ec tex eretit 6 the overs paid ad valorem taxes, On April 24, 1968, peti- tioner reiterated it* request for refund and/or tex credit, Respondent referred petitioner®s ree | quest to the Regional Director of North Menila, On August Ll, 1969, Gxaminer Deogracias A. Reyes of the said Regional Office, recommended to the reepondent Commissioner of Internal “evenue the refund or tex credit of 711,695,95 to petitioner, instead of 952,484.84, due to the prescriptive period for refund embodied in Section 399 of the Netional Internal hevenue Code, Gn March 1, 1970, however, senpenieas Gun= missioner of Internal Aevenue denied petitioner®s fequest for refund or tex credit of the alleged overpaid ad valorem taxes, On ‘pril 6, 1970, petitioner, thru the accounting ‘firm of Del Ro- serio & Co,, moved for o reconsideration of res- ' 167 DECISION .

CTA CASE NO, 2152 pondent*s decision based on his letter to a firm Of public accountants dated February 7, 1967, where= in he ruled that the ad valorem tex on gold should be based on the “actual market value" ‘thereof, (aIR FeCes PPe 65-663 CTA £@Cee PRe 10-11), On July G, 1970, petitioner filed tee peti- tion for review with this Court alleging, among others, the favorable ruling of said respondent mentioned aDOVR, Subsequently, respondent filed his answer to the peti-e tion for review alleging by way of specie] ond affir- mative defenses that respondent*s ruling of Pebruary 1, 1967 relied upon by petitioner has already been cancelled and revokedy that the Government is not estopped from collecting taxes due toc the error or mistakes of its agents and that even if petitioner is legally entitled to the refund of the overpaid 24 valorem taxes, the amounts peid on account there= -@f prior to July % 1968 cannot be refunded under the provisions of Section 306 of the Neticnal In- ternal “evenue Code.

There are, therefore, two (2) issues sub- mitted to this Court for resolution, namely:

168 DECISION .

GTA CASE ND,. 2182 oS «

(1) ‘hether or not the emount of subsidy received by petitioner from the Gold Subsidy Soard should be added or included in the officiel price of gold in computing and imposing the 1-1/2% ed valorem tax prescribed by Sgction 243 of

the MNetional Internal Revenue Codes and

(2) whether or not petitioner's claim for refund or tax credit filed with this Court hes elready prescribed under

Section 306 of the Wational Internel Rew~

venue Section 243 of the Netional Internal ie~ venue Code applicable to the case at bar provides es follows:

Petitioner vigorously contends that the amount of gold subeidy received by it as producer of gold should not be added or included by the respondent Commissioner of Internal Revenue in computing the 1n1/2 od valorem tax imposed by Section 243 of the

DSCISION «

CTA CASE NO,2352 ‘National Internal Revenue Code, supra, because to do so would contravene the meaning end definition of the phrase “sctual warket value" of the minerals or mineral extrected or produced from petitioner's mineral lands and defeat the liberal and benevolent purpose for which s¢public Act No, 4859 was enacted, In brief, petitioner contends that it was never the intention of the Government to subsidize gold pro- ‘Queers and at the sane time take away a part of the subsidy by imposing ad valorem taxes thereon, On the other hand, respondent maintains that the 1-1/2% ad valorem tax imposed by Section 243 ef the National Internal Revenue Code, suprde should be besed on the official world price of @oleé at 635,00 per cunce (sfter converting its equivalent in Philippine peso), plus the amount of subsidy given by law, In support of his — stand, respondent cited with spproval the pre= visions of Republic Act Wo, 1164 otherwise known a6 “An Act to Provide for fmergency Assis- tance to Gold Mining Industry of the Philippines,” Section 6 thereof provides as follows:

f 7 1707 ee

DECISION «

CTA CASE NO, 2152 titled to an aseistance from the Govern- ment = ? @72 per ounce for its on within the effectivity of this Act, not to exceed the production during its post-wer pesk year; Provi That in cese there is excess production, the assistance to be paid on the excese shall be thet which will ance, per

(b) In cases of operating gold mines which ere over the warginal classi ficetion, such mines shall be given en assistance assistance, es Se OUNCE.

_ Prom the provisions of law sbeve-cited, res- pondent stated that the phrase “sufficient to give the total, official price plus assistance” is indicative thet, from the inesption of the old subsidy sct, Congress intended and treatea . the subsidy or assistance to gold producer as part of the official price of gold and, therefore, the 1-1/2% ad valorem tax imposed by Section 243 of the National Internel Revenue Code should be based on the official price of gold plus the amount of subsidy given by the Government,

DEcTsIon ~

CTA CASE HO, 2152 We cannot subscribe to the theory of the respondent Commissioner of Internal Revenue bee ceuse Section 243 of the National Internal Re-~ Wense Code wep panengEneS wnteS Che toning power I of the State, The principal objective thereof io 46: wakne. Gents Ger Une neeeeet Ot tie Weeden ment. On the other hand, ®*epublic Acts Nos, 1164, 3089, 3472, and 4859 dealt) with the Government assistance to the gold mining industry an‘ the atatement therein that the totel value of gold includes the official price thereof and the sub- sidy given to the gold producer, does not in any manner implewent or amend the definition of the actual market value of gold, Thus, in the cases Procklich & Kuttner vs, The Insuler Collector of Custome and Kuengle & Streiff v. the Insuler Collector of customs, 18 Phil, 481, our Supreme Court held as follows:

It is e generel rule in the tation of all statutes levying taxes or duties

DECISION =

CTA CASE WO, 2152 most strongly ageinst the government and in favor of the eubjects or citizens, be- Cees Sarees See See Se Se iaeeeets be yond whet the stetutes expressly and cleare ly import. Revenue statutes are in no just ther remedial laws, or laws founded. public policy, and there- not also the pe pag nt very > vs, Trinidad, 43 Phil, 803). | More@ver, an exemination of Section 5 of Republic Act Wo. 3089 which took effect on June ‘17, 1961 shows that the amount of subsidy given to gold producers is not always « part of the total value of gold because said Section 5 con- sates the following ‘provisions:

* x * Provided, finally, That during the term of this Assistanca, the gold producer 2500.00 per month, In the light of the foregoing, it cannot — validly be said that the actual value of gold imposed by Section 243 of the National Internal Revenue Code includes the amount of subsidy given by the Gold Subsidy Board to the herein peti- | tioner, In faet, the extensive and whole- hearted effort of the Government to assist gold producers in the Philippines, instead of ‘ a73

DECISION «=

CTA CASE NO. 2182 giving additional tex burden, is clearly mani- fested in Section 13 of Republic Act No. 3089, the pertinent portion which reads as follows: Sec. 13.

amoun leble in “Gold Assistance Trust Pund", is not sufficient to provide fully for the assistance to be given to the gold mines under this Act, the Centre] Sank is further autho- rized to charge the current account of the Netional Treasury to make up for the Geficiency.

it can thus be seen that the total value of gold mentioned in the various gold subsidy laws as including officiel price plus sssistance has no bearing with the definition of the gctual market value of gold found in Section 243 of the National Internal Revenue Code, The clear intention of the Government to subsidize gold producers will be nullified if at the same time the said subsidy is held subject to the ad velorem tax prescribed by Section 243 of the National Internal Revenue Code, Seconp 1 sues Refunds and tax credits of revenue taxes are governed by Sections 306 and 309 of the National Internal Kevenue Code which read es follows:

DECISION «

CTA CASS WO, 2152 emy penalty without authority, or of any sum slleged to heve been excessive or in manner Interpreting the foregoing provisions on refunds and tax credits in.conneetion with See= tion 11 of Republic Act No, 1125, our Supreme Court in the case of Gibbs vs, Commissioner of Internal Revenue, L-17406, November 29% 1965, held as follows, peCcIsiIon CTA CASS HO, 2182 = {2 = x * x Sec, 106 of the National Internel Revenue Code should be construed ther with Section 11 of Republic Act 1125. In fine, = texpayer who has peid the tax, whether under protest or not, and who is Claiming refund of the same, must comply with the requirements of both sections, that is, he must file « claim for refuni with the collector of Internel Sevenue within 2 years from the date of his pay- and appeal to the Court of Tex Appeals - within 30 days from receipt of the Collector's Gecision or we pe hic claim ae co= In the case at ber, petitioner filed its claim for refund with the Sureau of Internal Revenue on De- comber 26, 1967, It filed with this Court the judi- ciel action for refund te enforce its claim only on July 9, 1970, Since the last payment of the ad valorem tax, aside from previous payments, was made by peti- tioner on January 16, 1967, it is clear that peti- tioner*s right to refund has slreedy prescribed,

DECISION «

CTA CASE NO, 2182 « iS = WHEATPORE, petitionear’s claim for the refund of the erroneously peid ad valorem taxes has to be, as it is hereby, denied, Without pronouncement as to costs,

Presiding Judge