The Court of Tax Appeals (CTA) has denied the petition filed by Oceanagold Philippines, Inc., which sought from the Bureau of Internal Revenue (BIR0 a refund or tax credits for P155.5 million in excise taxes which it claimed were illegally assessed and collected in 2017.
Oceanagold, a mining service contractor, disputed the 2021 and 2022 rulings of the CTA's second division which denied its claim for refund or tax credits.
The firm cited the Financial or Technical Assistance Agreement (FTAA) which stated that it is given a five-year period from the commencement of its operations to recover its pre-operating expenses, part of which are excise taxes on minerals.
It was able to obtain an Ore Transport Permit (OTP) from the Mines and Geosciences Bureau (MGB) for the sale and delivery of 5,500 metric tons (MT) of copper concentrates from the Didipio Mine to Poro Point, La Union.
While the BIR issued Ruling No. 10-2007, which confirmed its tax exemption, Oceanagold complained that the BIR still detained about 800,000 MT of mineral ores stockpiled on Dec. 7, 2012. In February 2013, the BIR seized another 100 MT of copper concentrates, it said.
On Feb. 15, 2013, the BIR then issued Revenue Memorandum Circular (RMC) No. 17-2013, which denied its exemption from payment of excise taxes and as it revoked its Ruling 10-2007.
Five days later on Feb. 20, 2013, the BIR detained another delivery of 160 MT of copper concentrates because Oceanagold failed to pay the excise taxes on all of its previously seized ores and copper concentrates.
In order to secure the release of its ores and copper concentrates, Oceanagold paid under protest the excise taxes worth P13,942,179.39 and P417,743.20 in February 2013. Despite this payment, the BIR once again seized 40 MT of copper concentrates.
The petition for review was filed before the CTA on Feb. 6, 2019, which sought a refund for P51,455,940.29 for taxes paid under protest. Another petition for review was filed on April 8, 2019 for the refund of P104,069,819.57. The two petitions were consolidated to reflect the total claim of P155,525,759.86.
However, the CTA's second division denied the petition for lack of merit in a decision dated Nov. 10, 2021. The subsequent motion for reconsideration was denied in a resolution dated July 11, 2022.
In its petition for review filed with the CTA as a full court on Aug. 12, 2022, Oceanagold argued that the non-critical delay in the implementation of the FTAA timetable should not deprive it from its exemption under the law. It added that there can be no recovery without commencing "actual" commercial production, and the FTAA itself allows deviation from its own timeline.
But the CTA, as a full court, ruled that Oceanagold has failed to prove its entitlement to the refund.
"The FTAA states that all taxes, including excise tax, collected during the recovery period is recoverable during the years they were incurred, provided that the amount collected is detrimental to petitioner's recovery of pre-operating and property expenses. In the event that there is no recovery, or the recovered amount is less than the tax paid or incurred, then petitioner's recourse is to deduct the amount not recovered from the government's share," the CTA said.
"Petitioner (Oceanagold), however, failed to prove that the payments of the subject excise taxes were detrimental to its recovery of the pre-operating and property expenses. There is no specific evidence showing such fact," it added.
Associate Justice Catherine T. Manahan wrote the 22-page decision with the concurrence of Associate Justices Ma. Belen M. Ringpis-Liban, Jean Marie A. Bacorro-Villena, Maria Rowena Modesto-San Pedro, Marian Ivy F. Reyes-Fajardo, Lanee S. Cui-David, Corazon G. Ferrer-Flores, and Henry S. Angeles.