A company involved in producing gold and copper has been ordered by the Court of Tax Appeals (CTA) to pay more than P262.3 million in tax deficiencies, including surcharges and delinquency and deficiency interests.

In a decision issued on Aug. 10, 2023, the CTA’s special first division denied the petition filed by Oceanagold (Philippines), Inc. which assailed the final decision on disputed assessment (FDDA) issued by the Bureau of Internal Revenue (BIR) on Oct. 16, 2017.

With the denial of the petition, the CTA ordered Oceanagold to pay the BIR P262,386,478.78, inclusive of surcharge, deficiency and delinquency interests imposed under Sections 248(A) and 249(B) of the National Internal Revenue Code (NIRC) of 1997.

Oceanagold was also ordered to pay “an amount of P83,464.39 per day computed from Jan. 1, 2018 until full payment thereof pursuant to Section 249(C) of the NIRC of 1997, as amended by Republic Act (RA) No. 10963, also known as Tax Reform for Acceleration and Inclusion (TRAIN), as implemented by Revenue Regulations No. 21-2018.”

Also, the CTA authorized the BIR, pursuant to RA 9262, the CTA’s expanded jurisdiction law, “to seize and distraint any goods, chattels, or effects, and the personal property, including stocks and other securities, debts, credits, banks accounts, and interests in and rights to personal property, and/or to levy the real property, of petitioner, in sufficient quantity to satisfy the taxes herein ordered to be paid, and the increments thereto incident to delinquency.”

The decision was written by Associate Justice Marian Ivy F. Reyes-Fajardo with the concurrence of Presiding Justice Roman G. del Rosario and Associate Justice Catherine T. Manahan.

Records showed that the BIR assessed Oceanagold for excise tax (ET) covering taxable year (TY) 2013 due to the firm’s sale of dore gold and metal concentrates that were subject to two percent ET in line with Section 151(A)(2) of the 1997 National Internal Revenue Code (NIRC), as amended, and RMC (revenue memorandum circular) No. 17-2013.

In its petition, Oceanagold told the CTA that “it is exempt from excise tax from the date of approval of its Mining Project Feasibility Study up to the end of the recovery period pursuant to the Financial or Technical Assistance Agreement (FTAA), Section 81 of RA No. 7942, otherwise known as the ‘Philippine Mining Act of 1995,’ and Section 236 of Department of Environment and Natural Resources Administrative Order (DAO) No. 95-23.”

The CTA said that RA 7942 provides that “the Contractor shall have a period of up to five (5) Contract Years, counted from the Date of Commencement of Commercial Production within which to recover its: (a) Pre-operating Expenses; and (b) Property expenses incurred during the period in which Pre-operating Expenses are covered, after which period only shall the right of the Government to share in the Net Revenue, as hereinafter defined, accrue.”

It pointed out that “the date of commencement of commercial operation started on Oct. 11, 2005, or the date of the MGB (Mines and Geosciences Bureau) approved petitioner’s partial feasibility study.”

“Counting five (5) years therefrom, the recovery period ended on Oct. 11, 2010,” the CTA said.

“As such, there is no legal impediment for the BIR to assess petitioner (Oceanagold) ET (excise tax) covering TY (taxable year) 2013,” the CTA ruled.