CTA Case No. 947 (Decision)

~EPUlJLIC Ol' THE PHILIPPINEI COURT OF TAX APPE.ALB QUEZON CITY REPUBLIC CEMENT CX:%{;RATif"!�J, C.I.A. CASES r�s. Petitioner , 947 & 1519 -versus - TI IE CX'!~.1ISSif'I\iER C''F H 1TSRNAL RSVENUE , .espon .en~.-1.- . X- - - -- -- --X DECISICN The above entitled cas es were submitted for de- cision jointly as both involve the determination of the amount of ad ..Y�:._2~ tax refu ndable to petitioner for the period from May , 1957 to ~ebruary , 1965 , pursuant to the final decision of the Supreme Court in G. P... No . L-20660 (C.. T � . � Case No . 947, d~ ted June 13, 1968. stri~0e of non-essentials , the facts are as follows : On November 1962, this Court :rendered judg- ment in C.T.A. Case ,o. 947 , holding petitioner liable � for the sum of -~48 , 689.02 as deficien cy royalty and/or ad valo":'em t vx , in clusive of 25~;~ surcharge , for the period from May? 1957 to December , 1959, with costs. Not agreeable with the decision , peti ticner ap~ca led to the Supremo Court (G. P. r-.ro. L 2()660 , ce nt en .ing , among others , that the correct basis of the imposition of the ad y_c;Jore.m tax is the actual market value of the r r v mat e rials or mi n~ial products used in the " manuf~c- ture of cement upon ~heir extraction f~om the mines ,

D~CISION - C5 �:: . A. CAS83 ~~OS ~ 947 & 1519 and net the market value or selling 0rice of cement as a finished prodlct , including the value of pape r bag c ontainer s as he l d by r e sponc. ent <Jnd s uste.ine .. by this Court. Like �Jise , it was contende r that it was not liC~ble f o:r the payment o:: the 25�~~ surcha:rge for late payment , because all its payments were mn de i n good f e1i th. Pending appeal and be c ause of the insist ent de- m~nds o~ r e spondent , pe titi oner pa id under protest the 1L v alo rem ta x from June 15 , 1 962 to .~.pril 1 , 1964 , in the tota l amoun t of ~7 23 , 273 . 04. Subse- quently , and within the time prescribed by law , on June 15 , 196L! , pe titi oner filed its petition for re- view claiming refund of the s aid amount b:3sed on the s ame ground s alleged by it in C . T . A ~ Case ~ . 947. On June 13 , 196 8 , the Supreme Court promul gated its de cision in G. R. No . L- Z::66C (c. T. A. C0se No. 947 , mod ifying the decisi on of t his Court and ha l ~ng , inter-alia , that the ad v alorem t ax should be based on the a c t~ market value of the� mine ra l products upon extraction the reof from the mines , and not on the c ost of extracti on. According~y , the c ost of the paper bag containers i s not includible in the compu - tat ion of the ad valorem tax 2nd /or royalty collectible by the Governme nt. Eowever , petitioner was held liable for the 25;S s ur c ha ~ge for late payme nt. 1he Supreme Court sai d:

DECISIO ~ - C. T. fl�� CASES NOS . 947 & 1519 " - .,j - "In conclus ion , petitioner is bound to pay the 1~5'1 ad valorem tax on the actual rna ket value of the mine~a ls or mineral products extracted from its mines, ~ith a 255'G. surcharge for failure to mnke said pay- ment within t he prescribed time. No evi- dence having been introduced , however , on said actu al m~rket value, the records are hereby remanc:ed to the Court of Tax ~.ppe::1ls , for the reception of evidence and further proceedings not inconsistent with this de- cision. x x x" Conformably with th~ foregoing decision, the re - cord of the case was remanded tot his Court for re- ception of evidence on the market value of the mine- rals or mineral products extracted from the mines to determine the tax base in computing the 1~~~ ad valorem tax and to enable this Court to arrive at the correct amount refundable to petitioner in C. .A. Case No . 1519. In order to abbreviate the Dro cee dings , and at the instance of both parties, this Court granted them the opportunity to administratively settle and deter - mine the market val ue to be used as t he proper tax base of the ad valo..f�.!!! tax . In line with the aforesaid de- cision of the Supreme Court , the amount refundable to petitioner as determined by respondent is 1,016 .,451. 92 , from ~hich the sum of J46 , 487.00, representing peti- tioner's income tax liability for 1969 , was deducted, leaving a bal nee of ~969 , 964.92. This determination is cont ained in the letter dated December 18, 1969 sent by respondent to petitioner , and the latter has agreed to said determination. The pertinent portions of the letter of re~pondent dated December 18, 1969 are reproduced below:

:. ' DECISION - C .T. A ~ CASES IDS. 947 & 1519 -4 - nrn connection with the cl aims of your client, REPUBLIC CEMENT CORFORA- TION, for r ef und of the sums of . 723,- 273.04 and -376,236.51 representing erroneous payment of ad valorem taxes for the period from May , 1957 to Feb - ruary, 1965, under let ters dated May 2, 1964 and October 29 , 1966, I have the honor to inform you that under the cir cumstances obtcining �in said cases , we have finally determined the market value of the quarried limesto~e for the taxable years in question for pur- poses of CTA Case Nos. 947 and 1519. Accordingly , after readjusting the ad valorem taxes paid by ycu r client and followi~g the decision of the - Supreme Court in G. R. Jo. ID660 entitled ' Republic Cement Corpora- tion vs. ''ciR.', this Office believes that it is entitled to a creditable amount of -1,016,451.92$ " egarding your letter dated De cember 17 , 1969 requesting tha t one-half (~) of your income tax liability for 1969, in the amount of �-46 , 487 . 00 be charged again~t your tax credit of Pl~Ol6,451.92, please be i1if ormed that inasmuch as s aid liability is a subsisting obliga- tion, a tax credit certificate will be issued for said amount. The re- lease of a tax credit certificate f or the balance of 969 ,964.92 will how- ever, be held in abeyance until such time as tbe Courts shall have finally decided your appeal from our assess~ ment of 7% manufacturer 's sales tax amounting to ~10 , 969,166 .45, C. T.A. Case Noo XJXJ dated July 24, 1969. � WHE?.EFORE , judgment is her~ by rendered de- claring petitioner entitled to the refund or tax

OECISI J - C. T c scs s. 947 & 1519 , -5- credit in t he sum of 969 , 964.92.. 'Hthout pr o- nouncement as to cost s. Quezon City , Septembe r 30 , 1970 . 'IE <XUCUR: , ~~~~"Y-t: ST.\NI'SCL?-.A. O R. ALVAREZ ssoci ate Judge L cf/ - � HM.'Olr L. I ~CEN ss ociate J udge