CTA Case No. 937 (Decision)

Republic of the Philippines COURT OF IAX APPEALS Manila PHII..Alv1 MINING , II'-!C. , ' C. T .A. CASES NCB. 937, Petitioner, 1138 and 1160 - versus - HON . NIELECIO R. DOMINOO, Commissioner, Bureau of Internal Revenue, Respondent. X- - - - - - � - - ~X DECISION The above-entitled cases are appeals from the decisions of the respondent denying the claims for re- fund of the sales tax paid by the petitioner on its sales of crushed rocks. The three cases were jointly heard ~y agreement of the parties. The petitioner is the lessee or concessionaire of the rock quarry belonging to the Talim Quarry Co., Inc. situated in Cardona, Rizal. It secures the rocks from the quarry by �light blasting and barring down with steel bars.� The broken rocks are further broken inte smaller pieces by manual labor for feeding into crush- ers to be washed, grounded and sized to specifications. It paid sales tax on its sal9s of such crushed rocks. Contending that crushed rocks are mineral products and therefore exempt from the sales tax under Section 188 (c) of the National Internal Revenue Code, it filed the corresponding claims for refund. The claims for refund having been denied, petitioner has appealed. In c.T.A. No. 937, petitioner is seeking there- - fund of fl7,067.10 , representing sales tax on sales of -,.. �-~

��I ' DECISION ... C.T.A. CASES NOS. 937; 1138 and 1160 -2 crushed rocks from February 11, 1959 to November 20 9 1959. In this case, respondent claims that the appeal was filed beyond the 30-day period prescribed in Sec- tion 11 of Republic Act No. 1125, hence, the appeal should be dismissed for lack of jurisdiction. Respond- ent also alleges that of the amount sought to be re- funded, the sum of 1!:1,036.50 was paid not by petition- er but by the Luzon Stevedoring Corporation; it is not, therefore, the proper party to claim the refund ef said amount. In c.r.A. No. 1138, the amount sought to be re- funded is � -7 ,806.13� representing the sales tax paid from December 21, 1959 to June 20, 1960. In C.T.A. No. 1160, the amount sought to be re- funded is 19,250.72, representing sales tax paid from July 20, 1960 to July 21, 1961. In this case, res-. pondent claims that certain payments allegedly made by petitioner do not c0rrespond to those paid by pe- titioner. The claims for refund involved in the above- entitled three cases were denied by respondent mainly on the ground that crushed rocks are not mineral pr0d- ucts and the sales of which are not exempt from the sales tax under Section 188(c) of the Revenue Code. In the event that they are held to be .mineral prod- ucts, it is alleged that petitioner should be held liable for the mining tax of ~% of the gross value of said products under Section 243 of the Revenue Code. No. In connection with C.T.A. 937, respondent

DECISION � . C.T.A. CASES NOS. �I ' 937, 1138 & 1160 .. 3 ... alleges: Petitioner's claim for refund in this case was filed with the respondent on Dec- ember 9, 1959� (Exh. 1, Respondent, BIR Rec., pp. 14-16, CTA 937.) Respondent den- ied this claim for refund in his letter to petitioner dated January 7, 1960. (Exh. 2, Respondent, BIR Rec. P� 21, C.T.A. No. 937.) As shown b� the Registry Return Receipt (Exhs. 2-A and 2~B, Respondent, BIR Rec. P� 22, CTA 937), the af~resaid letter of denial was received by the peti- tioner on February 10, 1960~ However, the petition for review in C.T.A. Case N0. 937 was filed with this Court on August 29, 1960, or after the lapse of 199 days from petitioner's receipt of respondent's decision. True, petitioner asked for a reconsideration of respondent's decision but even that was filed after the lapse of 36 days from notice of the decision sought to be reconsidered. (Exhs. 3 & 3-A:~.. Res- pondent, BIR Rec. PP� 23-.24, CTA 937,. ) The facts stated above are not disputed by petitioner. Therefore 1 we agree with respondent that the appeal in C.T.A. No. 937 must be dismissed for lack of jurisdic- t i o n .. The principal issue r.aised in the three cases is whether or not crushed rocks are mineral products. In the affirmative, the sales tax on the sales of such products were erroneously or illegally paid and peti- tioner is entitled to the refund thereof minus the cor- responding mining tax. In the negative, the sales of such crushed rocks are subject to the sales tax and the claims for refund must be denied. Section 188(~) of the Revenue Code exempts from the sales tax sales of minerals and mineral products if made by the lessee, concessionaire or owner of the mineral land from which removed. The word �minerals" means all inorganic substances found in nature whether /..

�' '. DECISION - C. T.A. CASE5 NOS. 937, 1138 & 1160 -4- in solid, liquid, gaseous, or any intermediate stateo The term �mineral products� means things produced by the les'See , concessionaire or owner of mineral lands, .: at least eighty per cent of which things must be minerals extracted by such lessee, concessionaire, or owner of mineral lands. (Sec. 246, Rev o Code.) Section 7 of . the Mining Act defines �minerals� as including �all inorganic substances found in nature in solid, liquid, gaseous or any intermediate state,� but does not in- clude �soil which supports organic life, � o � gravel, sand and stone which are used for building or construc- tion purposes. � From the foregoing definitions of �minerals� and �mineral products� it appears clear that crushed rocks for use in building and ccns~ruction purposes, such as those produced and sold by petitioner, are not �minerals� or �mineral products� within the meaning of Section 188(c) of the Revenue Code, because they are not minerals or -mineral products under the Mining Act and are n0t subject to the mining tax. The records show that the quarry from which the rocks were obtained by petitioner was not registe~ed with the Mining Re- corder as a mining claim and no mining tax was paid on such rocks. The minerals and mineral products which are ex- empt from the sales tax under Section l88(c) of the Revenue Code are those which are obtained from mineral .. lands and are subject to the mining tax provided in Ti- tle VII of the Revenue Code. The reason for the exemp-

QECISION - C. T.A. CASES NOSo 937 , 1138 & 1160 -5- tion is that the mining taxes �appear to be adequate as a means of taxing the mining industry.~ Under this section , it is proposed further to exempt from the sales tax, sales and consignments of minerals and mineral products by the lessee , conces- sionaire , or owner of the mineral lands from which removed , because the rates proposed under special mining taxation appear to be adequate as a means of tax- ing the mining industry. Minerals and mineral products extracted from mineral lands covered by lease are subject under another section to a royalty of 1~% of the actual market value of the gross out- put thereof , and thos e extra cted from mineraL~ lands not covered by lease are subject to an ad valorem tax of 1~% of the actual market value of the annual gross output of the minerals or mimeral products extracted or produced from the mineral lands. x x x. In addition to the royalty above stated , the lessee of the mineral lands pays a rental of 1 per hectare or fraction of a hectare of the mineral lands leased. It seems fair and just, therefore , that sales and con- signments of minerals and mineral products by the lessee , concessionairet or owner of mineral lands should be exempt from the sales tax. (Vo l . II , Report of the Tax Commission of the Phil. on National Internal Revenue Taxes, Feb., 1939 , PP� 202-20 3.) The crushed rocks produced and sold by peti.. tioner during the period under review not being mi- nerals or mineral p~cducts which are subject to the mining tax, the sales thereof are not ex~mpt from the sales tax under Section 188(c) of the Revenue Code. Accordingly, we find it unnecessary to pass upon the other issues raised by respondent. WHEREFORE, the appeal in C.T.A. Noo 937 is here- by dismissed for lack of jurisdiction, and the deci~

DECISION - C. T .A. CASES NOS. 937, 1138 & 1160 -6 - sions of respondent appealed from in CeToAo Nos~ 1138 and 1160 are hereby affirmed, with costs against peti- tioner. SO ORDERED. Manila, May 29, 1964. E C0 1CURS ROMAN M. UMALI Associate Judge /