CTA Case No. 2518 (Decision)

- .Cli,OBUC OF ~H� .-1-fiUPPIIII'"� ~OURT OF TAX ~PPt.:AL." Q\J~Ol'l Cl" MARINDUQUE MI lNG & INDUSTRIAL CORPORATION, Petitio ner, - versus - .. C.T.A. rASlS NOS. 2 ~ 1B r\. 2457 COMMISSIONER OF I NTERNAL REVENUE, Respondent. X- - - - - - - - - - - - - - X 0 ECI S I 0 N These are twin cases involving cluims for judiriol refunds of petitioner in the amounts of 81,751 . 00 (CTA Case No. 2518) and e2 , 777.00 (CTA Case No, 2457), as erro neously paid compensation taxes to respondent Com- missioner of Internal nevenue during tho years 1971, and 1 1970 and 1971 , respectively . ' It appears from the evidence and records of�th Ps8 two cases that petitioner and the Gove r nment have, on July 3, 1968, e nt ered into an operating contract ([xh. A, p p � 7- 2 1 , CTA r e c � ) , f o r t h e p e t i t i o ne r t-_ o de~v e 1o p , exploit, utilize ond process, as Operalor, the mineral deposits of Parcel II of the Surigao Mifieral Reservation. Under the said operating contract, it was provided in 1paragraph VI thereof, lCJbeled "ADDITIONAL RIGHTS \� 3?3

/ . .f DECISION - CTA CASES NOS. 2518 & 2457 - 2- AND PRIVILEGES OF OPERATOR" (pp. 15-16, CTA re c .), that: .. "The opera_tor shall a lso en_j__2y the following riahts and privil e oes : (l) XXX XXX X XX (2) Exemption from laws and regulations relating to: (a) import- ations of machinery, equipment~ accessories, spare parts, and/or supplies and mate ials necessary for or in connection with said operation or processing of minerals; (b) con- struction , installation and operation of power plants, including impor ta tj on of machinery and equipment , ac ce sso rie s , spare parts and/or oper a ting suppli es and materials should the National Power Corporation fail to supply with- in a reasonable period and at reason- able c~st the power needed in the operation; (c) exportation of c uc h machinery and equipment which were imported solely for construction an d P installation purposes in connection with the aforesaid operation and pro- cessing , and which are no longer needed in the operation ; ( 3) XXX XXX XXX (4) XXX X XX XXX (5) Exemption, from the date of effectivity of both the Memorandum of Agreement and this Operating Contr ac t up to and including the fifth yea~ after com mencem ent of actual production, from all taxes, duti e s, fees and ch a rg es , both national and local, directly payabl e by it for any work or activity, equipment, \ 3 ,_j 1 I '.i

DECISION - CTA CASESNOS. 2518 & 245 7 - 3 -� .; � P machin er y, materials f ins truments, supplies, accessories , s tructures, buildings, lands, improvements and/ or other properti es directly connected with or needed <Jnd to be used or b eing used exclusively in the operation, other than those provid e d in R.A. 1828, as amended, and except thos e fees and charges that are imposed for work or services actually ren de r ed to t he Operator." For the importation of equipment an d spare parts abroad in 1971 (CTA Case No . z:,]B) nnd so � also in 1970 a nd 1971 (CTA Ca s e No. 245 7) 7 v1hi ch eq u ipme nt and Dp;ne parts were use d a s i ntended 9 under petitioner and the Government's operating contract, and whi ch wer e dire ly needed in th e Surigao Nickel Project, and petitioner not being ab}e to wait for the Governme nt' s e ndor seme nt for their ta x exempt relea se from th e customs, petitioner t released th e importation and shipments by paying, among o thers, the co mpensating tEJxes thereon '''hi ch i s h ere in question, in the said a mo unts of el,751.00 (CTA Case No. 2518) and ez,777 . 00 (CTA Case No. 2457), r es pecti vely . Consequently, on October 19, 1971, pet ition er filed its claim for refund of the total amoun t of el, 751.0 0 as compensating tax erroneously paid on _the a for esa i d equipment i t imported for it s use in CTA Case No . 2518 (Exh. B, pp . 2 2-24, CTA Case No. 2518 rec.); ond on \ 3t-j. - ( tJ

DECISION - CTA CASESNOS . 2518 & 2457 - 4- J� May 31, 1971, petitioner filed its c laim for refund of the total sum of E2,777. 00 as compensating t ax it erron eo us ly paid on aforesaid e quipm ent it impo r ted f or i ts us e in CTA Case No. 245 7 . (Exh . B. pp. 5- 6, CTA Case No. 2457 rec.) No action having bee n forthcoming on the afore- sa id claims for refun d , petition e r to0k these two case s before Us by way of " Pet it ion s for Heviei'J" or judicial . c l aims for refund. Th e only iss ue in th ese tw o ( 2) cas e s i s whether or not petitioner is entitled to the ref und of th e sums of El , 751.00 , o nd 82 , 777.00 , or a g ra nd tot al of P-4 ,5 28 .0 0 as e rro ne ou sly paid compensating tax . The Op erat ing Contract (Ex h. A), under which peti- tioner predi ca te its c laim s for ref und, pro vide s that the importations mad e of equipment a nd shi p men t s of spare parts from abro a d and which were used in the pursu it of th e so- called Surigao Nic kel Project are exempt from taxe s . � Thi s provision in said contr ac t is ve ry clear and this was what wns intended by th e parti e s a nd our judicial illu cidRtion in thi s r espect is not n e c essary . Petitioner, under sa id p aragrap h VI of the i \

DECISION - CTA CASES NOS. 2518 & 2457 - 5- Operating Contract, is exempt fro the payment of all taxes, duties�, fees and . charges payable by it, amonq others, on any imported equipment, ma chinery, materials, instruments, supplies and accessories used in the Surigao Nickel Project during the years 1970 and 1971 in questi&n. The payments of the compensating taxes made by petitioner on these imported equipment and spare parts in the amounts of 81,751.00 (CTA Case No. 2518) and B2,777.00 (CTA Case No. 2457) is, therefore, erroneous since these imported equip- ment and spare parts are exempt from tax and said amounts of compensating taxes are legally refundable to petitioner. WHEREFORE, the respondent Commissioner of Internal Revenue is hereby ordered to refund to petitioner Marinduque Mining & Industrial Corporation the total sum of 84,528.00 as compensating taxes paid in the years 1970 and 1971. No pronouncement a~ to costs. , SO ORDERED . Quezon City, Metro Manila, July 1, ..........__ . ROAQUIN WE CONCUR : \ � 37 '1