OCEANAGOLD (PHILIPPINES), INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC OCEANAGOLD CTA EB NO. 2492 (PHILIPPINES), INC., (CTA Case No. 9289) Petitioner, Present: -versus- DEL ROSARIO , P.J. , UY, RINGPIS-LIBAN, MANAHAN, BACORRO-VILLENA, MODESTO-SAN PEDRO, REYES-FAJARDO, and CUI-DAVID, JJ. COMMISSIONER OF Promulgated: INTERNAL REVENUE, Respondent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RESOLUTION DEL ROSARIO, P.J.: This resolves petitioner's Motion for Reconsideration [of Decision dated May 31, 2022] filed on June 22, 2022, with respondent's Opposition (Re: Motion for Reconsideration of the Decision dated 31 May 2022) filed on July 18, 2022. Petitioner's Motion seeks reconsideration of the Court's Decision dated May 31 , 2022, the dispositive portion of which reads: "WHEREFORE, the Petition for Review filed on July 13, 2021 is DENIED. The Decision dated October 7, 2020 and Resolution dated March 12, 2021 rendered by the Court in Division in CTA Case No. 9289 are AFFIRMED. SO ORDERED.'(y/J

RESOLUTION CTA EB NO. 2492 (CTA Case No. 9289) In the present Motion, petitioner contends that neither the law nor the FTAA requires that payment of excise tax during the Recovery Period be detrimental before it may invoke its contractual tax exemption. To require it to submit additional documents beyond what is required is considered an impairment of such exemption. Even assuming that such requirement exists, petitioner alleges that it had sufficiently established that its payments of excise tax during the Recovery Period were detrimental to it as it had paid substantial amounts of assessed excise taxes as evidenced by the filing of refund claims pending in different courts. Petitioner's excise tax payments deprived it of the use of its assets or capital during the Recovery Period. Petitioner further argues that petitioner's tax exemption during the Recovery Period will be rendered nugatory if the only recourse available to it is to deduct the amounts of excise tax paid from the Government's Share in Net Revenues. On the other hand, respondent maintains that petitioner failed to discharge its burden of establishing its claim for tax refund. THE COURT EN BANC'S RULING The Court finds that the arguments raised by petitioner have been sufficiently threshed out and passed upon in the assailed Decision dated May 31, 2022. Nevertheless, the Court shall discuss the issues raised in the instant Motion for a thorough and comprehensive disposition of this case. Petitioner failed to prove that its payments of excise tax during the Recovery Period were detrimental to it, a requirement provided for in the FTAA itself The fourth paragraph of Section 11.2 of the FTAA reads: "11.2 Recovery of Pre!-Joperating Expenses, Property Expenses and Tax Paid During the Recovery Period. XXX XXX XXX All taxes, duties, fees, costs, levies and imposts paid by the CONTRACTOR and which are detrimental to the CONTRACTOR's recovery of Pre[-Joperating Expenses and &J Property Expenses during the five (5) Contract Years contemplated in this Section shall be recoverable by the

RESOLUTION CTA EB NO. 2492 (CTA Case No. 9289) CONTRACTOR, whenever possible during the year(s) such expenditures were actually incurred. Any amount not recovered shall be deducted from the GOVERNMENT's Share as more specifically provided in Section 11.5 of this Agreement, unless legislation is required to allow the necessary deductions, in which case the deductions shall be made only after the appropriate legislation has been passed." (Boldfacing and underscoring supplied) The FTAA explicitly provides that only those taxes "which are detrimental to [petitioner's] recovery of Pre[-]operating Expenses and Property Expenses x x x shall be recoverable by [petitioner.]" It is a rule in statutory construction that particular words, clauses and phrases should not be studied as detached and isolated expression, but the whole and every part of the statute must be considered in fixing the meaning of any of its parts and in order to produce a harmonious whole. 1 If the parties to the FTAA were of the view that any and all tax payments made during the Recovery Period may be recovered, then there was no reason to add the phrase "which are detrimental to x x x recovery of Pre[-]operating Expenses and Property Expenses[.]" The inclusion of such phrase shows the parties' intent to qualify the recoverable tax payments during the Recovery Period to those proven to be detrimental only. Contrary to petitioner's claim, there exists no impairment of the contractual tax exemption granted to petitioner during the Recovery Period precisely because it is the FTAA itself -- as the law between the parties2 --which provides for the requirement that the excise taxes paid be detrimental to the recovery of Pre-operating and Property Expenses before it can be refunded. A claimant for tax refund has the burden of proving the legal and factual bases of its claim. The burden of proof rests upon the taxpayer to establish by sufficient and competent evidence its entitlement to a claim for refund.3 Petitioner unsuccessfully discharged such burden when it failed to adduce evidence to support its claim that its payments of excise tax during the Recovery Period were detrimental to its recovery of Pre- 1 Commissioner of Internal Revenue vs. Pilipinas Shell Petroleum Corporation, G.R. No. 192398, September 29, 2014. 2 Goldloop Properties, Inc. vs. Government Service Insurance System, G.R. No. 171076, August 1, 2012. 3 Commissioner of Internal Revenue vs. Filminera Resources Corporation, G.R. No. 236325, September 16, 2020.Qfl

RESOLUTION CTA EB NO. 2492 (CTA Case No. 9289) operating and Property Expenses. Its argument that it could have used the amounts for other business purpose is a mere allegation, which is not evidence and not equivalent to proof.4 Moreover, petitioner's reference to other pending cases for the refund of its excise tax payments during the Recovery Period may not be considered. It is a rule that courts are not authorized to take judicial notice of the contents of the records of other cases, even when such cases have been tried or are pending in the same court. 5 Finally, the Court in stating that petitioner's available recourse is to deduct the amounts of excise tax paid during the Recovery Period from the Government's Share in Net Revenues is simply a remedy provided for in Section 11.2 of the FTAA. Anyway, petitioner only has itself to blame for its failure to prove that its payments of excise tax during the Recovery Period were indeed detrimental for such to be recoverable. In view of the foregoing, the Court finds no cogent reason to disturb or modify the findings and conclusions embodied in the assailed Decision dated May 31, 2022. WHEREFORE, petitioner's Motion for Reconsideration [of Decision dated May 31, 2022] filed on June 22, 2022 is DENIED for lack of merit. SO ORDERED. Presiding Justice 4 Philippine Amusement and Gaming Corporation (PAGCOR) vs. The Commissioner of Internal Revenue and The Head Revenue Executive Assistant, et seq., G.R. Nos. 210689-90, 210704 & 210725, November 22, 2017. 5 Pilipinas Shell Petroleum Corporation vs. Commissioner of Customs, G.R. No. 195876, December 5, 2016.

RESOLUTION CTA EB NO. 2492 (CTA Case No. 9289) WE CONCUR: ER~UY ON LEAVE Associate Justice MA. BELEN M. RINGPIS-LIBAN Associate Justice � " ~ '7- ,4c._...._et.,.~~- - A'rCOR""RG-VILLENA CATHERINE T. MANAHAN JEAN MARl Associate Justice ON LEAVE ~MJ~ MARIAN IVY F. REYES-FAJARDO LANEE 5. CUI-DAVID Associate Justice Associate Justice